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HMRC payment reference codes get too long for some bank accounts
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‘Change banks to fit in HMRC payment references’

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HMRC payment reference codes have become so complicated that employers may need to change banks to accommodate them, the ICAEW Tax Faculty warned last week.

18th Nov 2021
Editor at large AccountingWEB
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The allocation of HMRC payments has been a long-running headache for tax agents. In the transition to more digital services, the tax department attempted to resolve some of the problems by creating a set of reference codes to help taxpayers and agents specify the liabilities payments are intended to settle.

These attempts have not always met with success. In July, AccountingWEB members bemoaned the mysterious profusion of payment references coming out of the new capital gains tax online reporting mechanism, which appears to create three reference codes for each disposal: a CGT account number; a return reference number; and a third payment reference.

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Replies (11)

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By memyself-eye
19th Nov 2021 11:27

'change bank accounts = move to another bank!

Ohh Righto, that's fine then.....

Difficult enough running one's own bank account (HSBC seem determined to close all their long standing customers accounts) without the hassle of changing just to please HMRC

another cloud cuckko land notion

Thanks (5)
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By unclejoe
22nd Nov 2021 12:09

This is bizarre! But then, I guess, this is HMRC we are dealing with. I received a letter from them threatening penalties etc because the Corporation Tax was overdue. But I had paid it. When I eventually got someone on the phone I was told that I had used the wrong code. "But I used the same code as I had set up in the bank for last year" I said. So she told me that each year has a different reference number and that my payment had been posted to the previous year, but it didn't matter - she could transfer it to the right year. What a silly system and waste of taxpayer money (and my time). But there was an unexpected outcome. Because I had paid a day before the deadline I was due some interest - 2p! Ah well, that's the staff Christmas bonus sorted!

Thanks (1)
Replying to unclejoe:
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By memyself-eye
22nd Nov 2021 16:55

HMRC's interest rate is better than you would get from most banks - I used to pay early also!

Don't now cos I'm retarde.....err...retired.

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By North East Accountant
22nd Nov 2021 13:51

I never change the suffix reference on either PAYE or CT payments and continue just using the core references only.

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By Jill Palmer
22nd Nov 2021 14:31

Hi, I am even more confused now. For 'employees paid July 21' (i.e. paid for month 4) I would have thought the reference should add 2204 at the end not 2203?

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Replying to Jill Palmer:
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By Hugo Fair
22nd Nov 2021 14:53

Agree ... unless John's example was meant to refer to employees paid for June but in July (prior to the 6th) - which seems unlikely?

FWIW the concept of the 'suffix' digits has been around for eons, and dates back to when each payment to HMRC was made by cheque (with the 'reference' value inserted at the end of the Payee line) and accompanied by the relevant page from that year's payment booklet for that PAYE scheme.
You might think that HMRC would've noticed the changes by now (especially as all of those were enforced by them) ... but joined-up thinking was never a basic skill in much demand at HQ.
The real problem is the opaque (and fragile) processes on which HMRC rely to determine where your payment is allocated (not just type of tax and account number, but priority order if there are any outstanding or disputed amounts due).

Thanks (2)
Replying to Hugo Fair:
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By Paul Crowley
22nd Nov 2021 17:06

It was not one payment
NI needed to be shown seperately from tax
Just both being paid at the same time

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Replying to Paul Crowley:
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By Hugo Fair
22nd Nov 2021 17:48

You're (of course) correct ... I'd forgotten about the wonderful concept of sending TWO cheques each month.
Presumably this was because they were too lazy to transfer monies to DWP, as it was only NICs that were separated out. Everything else (incl Student Loan repayments) were bundled in with the IT.

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Replying to Hugo Fair:
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By Paul Crowley
22nd Nov 2021 19:21

I rememder it as one cheque but the two figures needed to be shown
Result often that a chase letter showed overpayment of one and underpayment of the other
Then the amounts paid as hand written on the P35 paper version asked for the totals seperately

Thanks (1)
Replying to Paul Crowley:
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By Hugo Fair
22nd Nov 2021 19:42

Ah, the joys of getting older include not minding when my memory fails to be 100% accurate!
There was definitely a time when two cheques were needed - because, almost unbelievably, the two payments had to be made to different bank accounts. Presumably it was seen as an 'enhancement' when one cheque was allowed (so long as the P35 showed the separate sub-totals).

And then was RTI ... and a change in banks ... and a change in allowed payment methods ... and a further change in banks ... and so on - whilst HMRC continued to make apparently random allocations of any payments received (which is where this thread started)!

Thanks (1)
Replying to Hugo Fair:
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By Paul Crowley
22nd Nov 2021 17:25

Agree the numbers. Article is incorrect It is a Four (watchout on the fairway)
The problem is thinking in m/e 5th as opposed to calendar month
Blame April, all her fault
M/E 5 April is prior year (I think March money)
so May Jun July must be three

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