HMRC is not always right when it comes to what you owe them. Perhaps that isn’t all that surprising for such a big organisation that handles millions of tax calculations every year. But it’s true. It’s not because they deliberately do it – mistakes do happen. We have seen many occasions when HMRC has told our clients they have underpaid PAYE when they haven’t. In this article we look at this area in a bit more detail.
When it comes to PAYE it is important that you, or your outsourced payroll provider, keep track of the amount you need to pay HMRC each month or quarter, so you can easily reconcile the amounts due with the payments made.
Don’t assume that HMRC are correct when they say you have outstanding payments due. Usually, you will know if you haven’t paid or are late paying your PAYE because of lack of funds and a quick check of your bank account will show whether you forgot to make the payment last month. But if you are really not sure that you owe them don’t just pay what they ask. Check your online PAYE account to see if the submissions they show agree with the payroll figures submitted and check the payments you have made against the payments they have received.
A recent example from a client shows that HMRC can get things wrong.
Last year one of our clients received a letter from HMRC stating that they had underpaid their PAYE, and as a result owed the money to HMRC. The client was convinced that they had not underpaid. A telephone call to HMRC led to them telling us that what we had submitted was wrong. They went on to say that we needed to correct our figures so that they agreed with their figures! We couldn’t do that, of course, because we knew our figures were correct. After a lot of investigation and much to-ing and fro-ing, we finally found the problem: it turned out that HMRC had duplicated an employee!
The moral of this tale? HMRC does make mistakes. Therefore, keeping accurate records and knowing what you need to pay and knowing what you have paid are vital when it comes to PAYE. If you don’t keep track you could be paying HMRC monies that are not due.