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11 Oct 2013

Problems PAYE

Having trouble with RTI. HMRC have received feedback that some PAYE schemes have experienced difficulties in reconciling the difference between the tax we say is due, and the tax they think is due!


Pay As You Earn Reconciling 2013-14 PAYE charges

Real Time Information

1) Introduction

On 12 August 2013 we published an internet ‘What’s New’ item entitled Real Time Information - reconciling PAYE charges where we explained that:

• We had received feedback that some PAYE schemes have experienced difficulties in reconciling the difference between the tax we say is due, and the tax they think is due

• We had set up a dedicated team to identify the cause of these discrepancies.

This report sets out the team’s findings from an analysis undertaken between July and September 2013.

2013-14 is a year of transition. We appreciate that employers and payroll service providers are still getting used to the new way of reporting. We also appreciate that where we are unable to agree the correct charge, this is a matter of concern for employers and their representatives as well as HMRC.

It is clear from the analysis that it would be helpful to increase knowledge of how the employer charge is created - both internally in HMRC and externally with our customers and their agents. Some customers did not understand how HMRC calculated the employer charge, and within HMRC, that lack of detailed knowledge by some contact centre advisors affected responses to customer contact and our handing of referred disputed charges. This meant that some employers were led to believe that their liability and payment had been calculated incorrectly, and so cases were referred incorrectly for review.

Work on developing that knowledge is now underway and we will publish enhanced guidance shortly.

Where issues occur we are working with employers, payroll service providers and, where appropriate, their payroll software providers to resolve issues quickly. But we also have to recognise these are often complex cases which require detailed work by both HMRC and the employer.

To put this in context, the number of charges being queried with our specialist team is only a small proportion (less than 1%) of 1.6 million RTI-reporting PAYE schemes. It is also worth reminding ourselves that it is highly unlikely that there will ever be a time when no PAYE charges are under query.

We have found that the majority of discrepancies have been due to misunderstanding, error or transitional issues as employers joined RTI, and there is no evidence of error in the way that HMRC’s IT systems create the charge. We recommend that employers and payroll service providers check HMRC’s guidance or liaise with their payroll software provider where they are unsure.

As new types of queries arise, we are adding them to those we are already reviewing. However, the number of queries being raised has reduced significantly over the last few weeks. This is in line with our experience in the RTI pilot of issues reducing as employers get used to the new way of reporting.


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