If you’ve ever looked at your HMRC account and thought, “This doesn’t add up,” you’re not alone. As a payroll provider, it’s not unusual to find discrepancies between the PAYE charge reported by HMRC and what you expect to pay. These issues can be frustrating, but with the right approach, you can get your account back in balance without losing your sanity.
Why Doesn’t My PAYE Charge Balance?
HMRC generates a PAYE charge each month, based on the data they hold. This data comes from your Full Payment Submission (FPS). Sometimes, however, what HMRC thinks you owe and what you actually owe can be worlds apart. The good news is, discrepancies don’t always mean you’ve made a mistake. They could be due to issues in HMRC’s records or a number of other reasons. Here’s how to get to the bottom of it.
Common Culprits Behind HMRC PAYE Charge issues
Duplicate Employee Records: One of the main offenders for discrepancies is the dreaded duplicate record. This happens when HMRC accidentally creates multiple records for the same employee, which can lead to over-reporting of tax or other charges. Think of it as HMRC getting a little too enthusiastic about your payroll and deciding to count your employee twice. Unfortunately, only HMRC can fix this, so if you spot a duplicate, it’s time to pick up the phone and let them know.
Inconsistent Employee Information: Sometimes, discrepancies occur simply because employee details are reported differently on various submissions. A tiny typo in a name or a mismatch in the National Insurance number can send HMRC into a tailspin. Always double-check employee information to ensure consistency and accuracy across all submissions.
How to Resolve PAYE Charge Discrepancies
Okay, so you’ve spotted a discrepancy. Now what? Here are some steps to sort it out:
Check Your Submissions: Start by reviewing the details you’ve submitted. Look for obvious errors, such as duplicate entries & employee number or multiple FPS submissions. If everything seems correct on your end, it’s time to move on to the next step.
Contact HMRC: If the issue isn’t on your side, it’s time to get in touch with HMRC’s Charge Resolution Team. They’re the experts at identifying and resolving discrepancies. When you contact them, be ready with as much information as possible (dates, employee details, the nature of the problem) to help them investigate more efficiently.
Keep an Eye on Your Account: After you've flagged the issue, keep an eye on your HMRC account. It might take a little while for them to process any changes, but staying on top of it will ensure there are no more surprises.
How to Avoid Discrepancies in the Future
We all know the old saying, “An ounce of prevention is worth a pound of cure.” So here are a few tips to avoid those pesky discrepancies before they happen:
Get the First FPS Right: The first Full Payment Submission is key to setting up an employee’s record with HMRC. If you get the details right from the start, you won’t have to worry about cleaning up mistakes down the line. Make sure you’re submitting all the correct employee info from the get-go, because once that ship sails, it’s a little harder to correct.
Unique Payroll IDs: Every employee should have their own unique payroll ID. Reusing payroll IDs, especially for employees who have left and returned, can trigger duplicate records in HMRC’s system. It’s like giving someone the same seat on the bus twice - things get confusing!
Report Departures Accurately: When employees leave, make sure you report their leaving date correctly. And if they come back after some time away, be sure to report their rehire date accurately too. It’s all about keeping things crystal clear and easy to follow for both you and HMRC.
Payment After Leaving: If an employee leaves and you need to make an extra payment, ensure you have already issued a P45 before setting the Payment After Leaving Indicator.
Consistency is Key: Inconsistent data is like the breadcrumbs leading HMRC into the woods. Ensure that employee names, National Insurance numbers, and tax codes are always reported in the same way. If you need to make a correction, make sure it's precise and only when absolutely necessary.
Key Takeaways for Payroll Departments
Accuracy First: The first FPS submission is the most important, so make sure the details are correct and complete. Small errors early on can snowball into big issues.
Track Payroll IDs Carefully: Always assign unique payroll IDs, and avoid reusing them for returning employees. Duplicate records can be a pain to fix.
Act Fast: If you spot any discrepancies, don’t wait around. The quicker you contact HMRC, the sooner the issue can be resolved.
By following these simple steps, you can keep your PAYE charges in line and prevent unnecessary headaches. And remember, when in doubt, HMRC’s Charge Resolution Team is just a phone call away. Keep your data accurate, and your payroll process will run like clockwork—no surprises here!
Need help, drop Austin a line for a coffee on Zoom - austin@yourpayrollmanager.co.uk
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