The following information from HMRC gives the most common causes of discrepancies between HMRC's record of what is owed and your own record of what is owed.
- Duplicate employments:
Duplicate employments (resulting in an overstated charge to HMRC), including those caused by the reporting of leaver information.
Duplicate employments are created when an FPS gives different details for an employee to those held by HMRC, for example date of birth, NINO, start date or works/employee number. Duplicated employments can lead to an overstated charge, causing an apparent underpayment from the employer perspective.
Refer to HMRC's guidance on avoiding duplicate employments at
- EPS issues:
EPS issues arise due to instances where the employer hasnít submitted an EPS, but has made adjustments, for example statutory payment compensation, to his payment to HMRC and also due to instances of confusion over which month the EPS credit is allocated to.
- Alignment of payments made with the tax period:
Incorrect payments made to HMRC when there are both weekly and monthly payrolls, or paying to HMRC deductions for 4 weeks when there are 5 weekly paydays in the month, are both recurrent causes of confusion.
- Inclusion of previous employment details:
Inclusion of the year to date figures reported for an individual include pay and tax information from the previous employment.
- Student Loans:
There are several instances of student loan deductions causing a discrepancy. A common theme seems to be that deductions are missing from the FPS submission, even though the employer has included them in their payroll.
- Removal of leavers:
There are several instances where information continues to be reported for leavers and causes a discrepancy. In some cases the employer is unable to remove leavers from payroll and as a result the software continues to include them on FPSs even though the employee has left and is no longer being paid.
- Employer paying what they believe they owe, not what they have reported:
There are several instances where the employer has made an adjustment for something they learnt about after the FPS return was sent. For example, they have made an adjustment to their payroll information, without sending a supplementary FPS, and then paid HMRC the adjusted amount they believe they owe. However, the legislation requires employers to pay what they have reported as due by the 19th of the month after the end of the tax month. And HMRC systems can only base the employerís charge on the information that has been reported.
- Other miscellaneous reasons:
Other miscellaneous instances of employers getting used to what needs to be reported:
- Redundancy pay included in taxable pay in error.
- Duplicate payroll was submitted under a different employer reference.
- Employee missing from submission.
- Employee not been ceased correctly in payroll, reporting continued.
- Some employees were freelance and should not have paid tax or NI.
- NI deductions made in error.
- Employer didnít realise they needed to pay the employer element of NICs.
- NI missed off FPS.
- Employers NI not included in FPS.
- Employee pay figures relate to a previous tax year.
- Change of payroll provider, both old and new providers submitted FPS.
- Employer pays employees 3 weeks in arrears but calculation of payments to HMRC didnít take that into account.
- Erroneous employee on payroll.
- Payment to employees made early over the Christmas period, 2 months pay on one FPS.
- Employer forgot to tell payroll agent about a new employee.