HMRC have issued a report which sets out findings from an analysis following feedback that some employers under RTI-reporting PAYE schemes have experienced difficulties in reconciling the differences between the tax HMRC say is due and the tax they think is due according to Harris & Co chartered accountants Northampton who specialise in providing specially designed accountancy services for small businesses.
The findings show no evidence that HMRC IT systems are calculating the PAYE charge incorrectly. HMRC have identified that the problems in reconciliation have arisen because some employers did not understand how HMRC calculated the employer charge. HMRC have also found that internally, some of their contact centre advisors lacked detailed knowledge which has resulted in ‘some employers being led to believe that their liability and payment had been calculated incorrectly’. HMRC say that 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 employers and their agents.
HMRC have identified miscellaneous employer error; Employer Payment Summary (EPS) returns; payments to leavers; the timing of updates to HMRC’s Business Tax dashboard; and issues relating to returns for Construction Industry Schemes as key causes of discrepancies.
The report stresses that the number of charges being queried is less than 1% of the 1.6 million RTI-reporting PAYE schemes, and the majority of discrepancies have been due to misunderstanding, error or transitional issues as employers joined RTI. HMRC recommend that employers and payroll service providers check HMRC’s guidance or liaise with their payroll software provider where they are unsure.