COMPLIANCE
Reconciling your HMRC business tax account for PAYE
Ben May ChMCIPPdip, Head of Payroll Product Compliance, ADP UK, discusses the importance of reconciling payroll reports against data held in your HM Revenue and Customs (HMRC) business tax account (BTA)
H ow often do you log in to payments and liabilities? Do you check whether the charges HMRC calculates and the credits applied match your payroll reports? Do you even know the login details to access your HMRC BTA? Increasingly, I hear that the charges HMRC considers in the HMRC BTA for PAYE don’t match payroll reports. Why could this be? your HMRC BTA to view your business’s pay as you earn (PAYE) Firstly, we need to consider how the figures shown in the BTA are calculated. The year-to-date (YTD) figures in each full payment submission (FPS) are subtracted from the YTD figures HMRC has previously recorded in its system to arrive at the period charge. From the FPS the following information is broken down into: l Income Tax l student loan and postgraduate loan deductions l employee National Insurance contributions (NICs) l employer NICs l in-year Class 1A NICs. The employer payment summary (EPS), submitted by the 19th of the month following the end of the tax month, informs HMRC of any apprenticeship levy charge and construction industry scheme credit, along with any statutory parental payments
created on HMRC’s side, due to payroll ID changes or incorrect personal information.
breakdown for each tax period. You can also view the payment history and identify which periods and tax year payments have been allocated. Payment references HMRC states it’s important to reference your payments correctly, especially when payments are made early or late, to ensure they’re allocated to the correct tax period. HMRC explains: “You need to add four extra numbers to your 13-character Accounts Office reference number if you’re making an early or late payment.” Details can be found here: https://ow.ly/q0SG50WpLvn. The first two digits represent the tax year end – for example, for the 2025/26 tax year, the two digits would be 26. The following two digits represent the tax month number – for example, 6 May to 5 June would be 02. You would then append these to the 13-character Accounts Office reference number, resulting in something like 2602. Under normal circumstances, if your payment is for the latest outstanding balance, it should be allocated to the most recent debt, and everything should reconcile. What action can you take? 1.) Understand which payroll reports from your payroll software are required to reconcile against the charges and credits HMRC records. 2.) Reconcile against the charges and credits HMRC considers each tax period. Don’t leave this until the end of the tax year, as interest charges will start to accrue from the month of the discrepancy and will continue to increase until the discrepancy is resolved. 3.) Be aware there are several reasons why HMRC’s charges may differ from your payroll reports. One of the most common issues is duplicate employments being
When reconciliation fails If you’re unable to reconcile or you identify differences between your payroll reports and HMRC’s charges, then employers and agents can now use a new service HMRC has introduced to dispute a PAYE charge, and ask HMRC to help find the payroll error and fix the problem. This new service can be found on GOV.UK, under ‘Get help to correct an employer PAYE bill’ (https:// ow.ly/jVni50WT2VX). Employers / agents will need to sign in with their Government Gateway user ID and password to access the service. Before using this service, ensure you have YTD figures for the following: l Income Tax l student loan and postgraduate loan deductions l employee NICs l employer NICs l in-year Class 1A NICs. HMRC will then investigate and return employee-level data to the employer. This may result in the need for corrections by either the employer or HMRC, particularly in cases involving duplicate employments. Final thoughts Keeping your HMRC BTA in sync with your payroll records isn’t just good practice – it’s essential for avoiding unexpected liabilities, penalties or payment misallocations. By regularly reconciling your PAYE data, understanding how HMRC calculates charges / credits and promptly addressing discrepancies, you can ensure smoother financial management and compliance. If you’re unsure where to begin or need help interpreting your payroll data versus HMRC’s records, speak to your payroll provider or a payroll professional. Early action can prevent long-term headaches. n
being reclaimed and employment allowance, where applicable. HMRC
presents these reclaimed payments under “credits”. Again, the same principle is used to calculate the values: the latest YTD value in the EPS is subtracted from the previous YTD figure supplied. Each month, HMRC totals the charges, subtracts the credits and arrives at the amount due for the tax period. This could also include penalty charges, interest charges and P11D(b) Class 1A National Insurance. Within the BTA, you can view a
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| Professional in Payroll, Pensions and Reward |
Issue 114 | October 2025
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