What you need to know about PAYE disputes
Kate Upcraft explains why you should be bothered by disputed PAYE charges.
Don’t ignore discrepancies
You may well be told by HMRC staff on the Employer Helpline that you can simply ignore any PAYE discrepancies showing on your business tax account, (aka Business Tax Dashboard or PAYE Liabilities Viewer), but it’s a brave employer or tax agent who takes that assurance on trust.
In RTI duplicates: It’s not just you, I outlined some of the reasons for discrepancies appearing on your business tax account. These can occur both in the “amount due” column (FPS and EPS issues) and in the “amount paid” column (payments to HMRC). The HMRC teams all have different access to the calculated figures, so they can’t see what you can see. This complicates your communication with HMRC, and increases the risk of the debt collectors rolling into action.
Effect of a disputed charge
Raising a disputed charge will stop Debt Management and Banking instructing Field Force Collectors to chasing debts at your clients’ premises. While you as the tax agent are well aware that the RTI submissions are correct, and remittances all duly paid, an unscheduled door-step meeting with debt collectors is extremely damaging on a reputational basis for both you and the client. Clients should be clear they should not simply pay a Field Force Collector without reference to their tax agent. Those collecting debts will have no background information, only the outstanding amount they have been asked to secure.
How does the disputed charge team work?
The HMRC disputed charges team were set up in 2013, and they are now receiving 650 formal PAYE disputes a week. I use the word “formal” as you have to be fairly assertive to get a dispute raised. Employers and tax agents cannot access the team directly, but have to be referred by the HMRC Employer Helpline. They may well try to dissuade the caller from raising a dispute on the basis that the business tax account figures cannot be relied upon, and all is probably well. Unfortunately, as PAYE professionals that is not an excuse we can accept.
What happens next?
HMRC have assured the RTI taskforce that if a disputed charge is accepted by HMRC, then compliance activity (debt collecting) stops whilst it is investigated. However, it is certainly not fool-proof, as there are plenty of instances of compliance activity restarting after a few months.
Once the dispute is accepted there should be some acknowledgement of the investigation by HMRC. These acknowledgments can also take many months to arrive (14 months is the record for my clients) if they arrive at all. As to the investigation - that sits firmly with HMRC.
What you need to do
You should not have to re-send amended Full Payment Submissions (FPSs), Employer Payment Summaries (EPSs), spreadsheets or Earlier Year Updates (EYUs). Often this is the only proffered solution by HMRC. But where the data you have sent and the payment you have made to HMRC are correct, altering your audit trail to amend the PAYE records in order to untangle HMRC’s data just moves the corruption to you from them. Often the only way to leave your records intact is to use the Basic PAYE Tools EYU facility that is independent of your payroll records and software.
When will it end?
You may not be told when the dispute is resolved. Few employers receive a confirmation of what has been done and why, they just go on to their business tax account one day to find that the figures have mysteriously resolved themselves, sometimes years after the original dispute was raised.
As I said in my last article every dispute has at its heart not only an employer or agent with the burden and worry of an apparent PAYE compliance issue but also one or more taxpayers whose tax, NI, student loan balance, tax credits or Universal Credit (or a mixture) are incorrect. That is why we owe it to our employees that all discrepancies are followed up.