On 26 September 2013 HMRC published a report
into the findings
from an analysis of disputed pay-as-you-earn (PAYE) charges associated with
"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."
HMRC set up a dedicated team to identify the cause of the discrepancies.
"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
The report goes on to note:
"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......
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 t
heir payroll software provider where they are
Specifically the team found:
No evidence that HMRC IT systems are calculating the charge incorrectly.
That there have been some problems associated with the transition to RTI with:
Information which has resulted in duplicate employments (resulting in an overstated
A small number of submitted FPS’s not being passed to the accounting system in a
timely manner resulting in no charge being created, or an understated charge.
Key causes of discrepancies were:
Miscellaneous employer error
Employer Payment Summary (EPS) returns
Payments to leavers
Timing of updates to HMRC’s Business Tax dashboard (the View Account facility in
the PAYE Online account)
Issues relating to returns for Construction Industry Schemes
While not a dispute with the amount of the charge itself, the following have featured in
several cases reviewed:
The way payments are allocated to debts
The information displayed to the employer in the Business Tax dashboard
Misunderstanding how employer charge is calculated
HMRC will continue to monitor cases where it is unable to reconcile the amount of PAYE due with
taxpayers, and will publish new guidance on how the employer charge is calculated.
Tax does have to be taxing.
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