PAYROLL INSIGHT
Payroll ID mismatches
E. David Rees FCIPPdip, team manager iHCM Relationship Managers, ADP, reveals recent poll results and explains how to avoid duplication of records that may be the source of various issues
I recently asked the CIPP to run a poll of members to discover any real time information (RTI) full payment submission (FPS) issues they have experienced with HMRC. I was astonished with the response: ● 61% of members have ongoing FPS problems with HMRC ● 8% have experienced similar issues in the past, which are now resolved ● 31% did not and never have had any FPS problems with HMRC. Each FPS is a record of payments to the specified employee (or pension recipient) containing this period and year-to-date values. HMRC uses the FPS records when calculating the amount of tax and National Insurance contributions (NICs) etc due to be paid under the pay as you earn (PAYE) scheme in question. Since the survey, I have been considering the potential causes of these problems and have looked at issues arising when changing payroll software suppliers. When moving a payroll from one computer system to another normally we take great care to ensure employee data is accurate and that we fully reconcile our year-to-date
record history for a leaver. At this stage, it’s important to remember that if a new payroll number is going to be used for a payee the payroll operator must use the ‘Payroll ID changed indicator’ field in the first FPS the employer sends to HMRC for that person. In addition, the ‘old’ and ‘new’ payroll numbers must be entered in that FPS thereby allowing HMRC to amend the Payroll ID it holds in its system so that attribution of data and consequent calculations are accurate. Failure to do this can generate a duplicated record in HMRC’s system with startling impact on the calculation of the amount of tax/NICs etc due. This calculation uses the YTD values reported in the FPS. If there is more than one Payroll ID change failure, you’ve got a bewildering disaster on your hands. Although this scenario merely impacts payment to HMRC, employees (pension recipients) may also in due course be impacted. HMRC may well issue tax code adjustments for the individual and if the person is receiving an earnings-related benefit entitlement may well be reduced or restricted. How can you resolve this kind of issue? The first step is to use the Government Gateway to see the state of the PAYE scheme account with HMRC. You might
(YTD) figures ready for the go live payroll run. So, what is going on when, shortly after that first run, HMRC make a demand for payment? What is happening when employees receive incorrect tax code notifications or – even worse – their benefits are stopped? These scenarios are distressing, but worryingly common. In many cases, they could possibly indicate duplication of records at HMRC due to a discrepancy with the Payroll ID data in a FPS return. The Payroll ID field in a FPS is key to linking that FPS to an existing HMRC record for the PAYE scheme. The Payroll ID is generally the payroll number the employer has allocated to the individual for payroll processing purposes. In some circumstances, HMRC’s system will create a new employment record where a new Payroll ID is reported in a FPS (see ‘What payroll information to report to HMRC’ – copied from GOV.UK page: http://bit. ly/1Pt8tqJ – at end of the article). When changing software, we are required to provide all relevant information in order either to pay an employee or to
...61% of members have ongoing FPS problems with HMRC...
| Professional in Payroll, Pensions and Reward | October 2017 | Issue 34 32
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