HMRC has responded to AccountingWEB’s queries about payroll payments and liabilities being duplicated when employers change their software by offering extra guidance on what’s required.
“Changing software provider can result in duplicate records if the employer doesn’t follow our guidance correctly,” the department said.
In recent weeks, AccountingWEB members reported that their clients were getting pressed for outstanding debts caused by unaccounted increases in their periodic liabilities. When traced back to the source, the advisers were told that HMRC’s computers had not been able to match the new payment submissions to the old employees and generated new records for them, effectively doubling the PAYE owed by the employers.
Payroll ID changes
1. Use unique payroll IDs for all employments
2. The payroll ID field is essential where an employee has more than one employment in the PAYE scheme. Unique IDs should be used for each employment
3. If an employee leaves and rejoins the scheme after a short gap, use a new payroll ID
4. Report payroll ID changes must be reported by providing both the old Payroll ID and the new Payroll ID - payroll software products should report these changes by including a Payroll ID change indicator. If you cannot obtain the old payroll ID, ask HMRC’s Employer Helpline.
Source: HMRC tips
HMRC explains that duplicate employments are created automatically when the payroll data submitted differs from the data received from previous submissions. If the software cannot match the latest submitted data to an existing HMRC employment record it sets up a new one and posts the latest full payment submission (FPS) information there.
The discrepancy can be caused by something as simple as changing employee numbers from 1-10, but software changes it to 001-010. Humans and some software systems can be programmed to interpret the new numbers, but the RTI systems interpret the different numbers as a change to the data.
When RTI was being designed, payroll and software industry figures warned HMRC not to put too much emphasis on the employee number, as it can change for other reasons than new software - for example in larger organisations employee numbers are often linked to departments, and can change if the employee moves within the organisation. But having written this data field into its validation checks, the cost of changing it now could be prohibitive.
Some of the other causes for duplicated employment records include:
- employee starting or stopping a second job in a particular month, but HMRC doesn’t receive this information
- someone starts/stops receiving a benefit in kind, such as company car, or medical insurance and this not reported to HMRC immediately
- an individual starts/ stops receiving a pension in year and this is not reported.
If HMRC identifies duplicated records, it will automatically correct them and adjust the year to date charge by the 12th of the month following a correction. The correct figure will be shown on the employer’s Business Tax Dashboard (now known as “Your tax account”), but previous periods’ figures will not be updated.
If employers can’t reconcile what they think they owe HMRC with what HMRC says is due, they should work through the Reconciling PAYE charges helpsheet.
To try and minimise the situations that can cause duplications, HMRC has updated its guidance on Information you must get right when running your payroll. As HMRC director general for personal tax explained to AccountingWEB in March, efforts have gone into creating automated systems to catch and correct duplicated employment records that do get created.