Reconciling the difference between the tax that HM Revenue and Customs (HMRC) says is due and the tax an employer believes is due is one of the most common difficulties experienced by employers since moving to real-time information (RTI) reporting in April 2013.
In September, HMRC published the findings of analysis into disputed pay-as-you-earn (PAYE) charges associated with RTI reporting.
More than 44 million individual PAYE records are being reported using RTI, which represents more than 90% of all employment. Under RTI, employers have to send details to HMRC every time they pay an employee, at the time they pay them.
Problems have occurred with missing payments, duplicate information about staff and a lack of communication.
Steve Ashworth, associate director of employment tax at Smith and Williamson, said: “A lot of the problems are to do with the information being sent through and it’s not cutting across onto the RTI system.
“Big issues seem to be where there is still duplicate information about employees on the system, individuals being set up and missing payments. As soon as the payments are missing, HMRC is, not aggressively, chasing up by asking where the monthly payment is, while employers are telling it they’ve paid it.
“But some organisations are struggling with the basic PAYE tools, everything from submitting [data] to not being able to print P45s, which has been rectified, but there has been a lack of communication from HMRC about the updated system.
“My big concern for RTI is what will happen at the end of the tax year in April and everything is balanced up? Are there going to be underpayments or overpayments?”
A statement from HMRC said: “The roll-out of RTI continues to go well. More than 1.66 million PAYE schemes have successfully started to report in real time. This represents more than 88% of PAYE schemes and is at the top end of our expectations.
“As expected with such a major change, there have been some issues, which have impacted a small proportion of employers, but most have been resolved quickly.
“Some PAYE schemes are experiencing difficulties in reconciling the difference between the tax that HMRC said was due and the tax the employer thinks was due. The number of disputed charges is relatively small, affecting less than 1% of employers.
HMRC said the number of queries being raised had reduced significantly recently, which was in line with experience gained from the RTI pilot of issues reducing as employers get used to the new way of reporting.
“Our analysis shows there is no evidence at all of HMRC IT systems incorrectly calculating the charge and that the majority of discrepancies were due to employer misunderstanding or error as they get used to the new system,” it said.
“HMRC will continue to monitor cases. This will ensure HMRC has seen the full range of issues that may arise over the course of time.”