HMRC shares latest issues causing disputed charges

17 April 2014

HMRC’s Software Developers Support Team (SDST) has carried out a further review of causes of disputed charges.

HMRC’s Software Developers Support Team (SDST) has carried out a further review of causes of disputed charges. Whilst all concerned appreciate the issues with RTI, from the SDST’s findings, there are ways in which employers can help to minimise causes.

The main causes identified in this latest review are very similar to those published last summer. There are miscellaneous different examples of confusion, which may be linked to employers getting used to RTI reporting. Some examples are listed at the end of the SDST’s update, but there are also some recurrent themes:

Duplicate employments, including those caused by the reporting of leaver information continue to be a big factor. Guidance was recently published on avoiding duplicate employments. We are making good progress in recovering existing duplicate employments and are in the process of enhancing our systems to increase the number of duplicate employments corrected before the information is used to create the employer charge.

EPS issues - we continue to see instances where the employer hasn’t submitted an EPS, but has made adjustments to their payment to HMRC, e.g. statutory payment compensation. We are also still seeing instances of confusion over which month the EPS credit is allocated to.

Alignment of payment made with the tax period - incorrect payment made to HMRC when there are both weekly and monthly payrolls, or paying to HMRC deductions for 4 weeks when there are 5 weekly paydays in the month - both are recurrent causes of confusion.

Inclusion of previous employment details – the year to date figures reported for an individual include pay and tax information from the previous employment.

Student Loans – there are several instances of student loan deductions causing a discrepancy. A common theme seems to be that deductions are missing from the FPS submission, even though the employer has included them in their payroll.

Removal of leavers – there are several instances where information continues to be reported for leavers and causes a discrepancy. In some cases the employer is unable to remove leavers from payroll and as a result the software continues to include them on FPSs even though the employee has left and is no longer being paid.

Employer paying what they believe they owe, not what they have reported – there are several instances where the employer has made an adjustment for something they learnt about after the FPS return was sent. For example, they have made an adjustment to their payroll information without sending a supplementary FPS, and then paid HMRC the adjusted amount they believe they owe. However, the legislation requires employers to pay what they have reported as due by the 19th of the month after the end of the tax month. And HMRC systems can only base the employer’s charge on the information that has been reported.

Other miscellaneous reasons
We continue to see miscellaneous instances of employers getting used to what needs to be reported. The following examples are shared because they may provide useful pointers in understanding the types of things that are happening:

  • redundancy pay included in taxable pay in error
  • duplicate payroll was submitted under a different employer reference
  • employee missing from submission
  • employee not been ceased correctly in payroll, reporting continued
  • some employees were freelance and should not have paid tax or NI
  • NI deductions made in error
  • employer didn’t realise they needed to pay the employer element of NICs
  • NI missed off FPS
  • employers NI not included in FPS
  • employee pay figures relate to a previous tax year
  • change of payroll provider, both old and new providers submitted FPS
  • employer pays employees 3 weeks in arrears but calculation of payments to HMRC didn’t take that into account
  • erroneous employee on payroll
  • payment to employees made early over the Christmas period, 2 months pay on one FPS
  • employer forgot to tell payroll agent about a new employee.