A common payroll problem: and how to avoid it
Nearly 90% of businesses made payroll mistakes in the last year, research suggests. Errors can easily
translate into overstretched payroll staff, who need to follow up what’s gone wrong, and employees who
are left wondering what’s happened to their wages.
A common problem area highlighted by HMRC is the creation of duplicate employments for employees. Where
an extra employment record gets set up that’s identical to an existing live (or ceased) employment,
things can get messy. Quite apart from employee tax coding issues, there’s the potential for apparent
understatement of employer PAYE liability, and the possibility that HMRC might start debt collection
Duplicate employments can be triggered in a number of ways. Key areas to watch are:
- procedures when a new employee starts work
- payroll ID changes
- when (and after) an employee leaves
- occupational pension and irregular payment fields.
Getting the starter notification and first Full Payment Submission (FPS) right, with accurate personal
details, will avoid the need to file updates to employee name, date of birth and gender. Making sure
that information is consistent will also help. If the initial FPS gives the name Zachary O’Keefe, make
sure that’s the name used in future, and that it doesn’t get abbreviated to Zak O’Keefe, or Z O’Keefe,
for example. HMRC notes that different payroll solutions give different capability and levels of
control. But it still expects employers to understand what’s going on. It’s the payroll software that
usually generates employee payroll numbers (sometimes known as employee numbers or employee unique
payroll ID), for instance: but HMRC expects employers to understand how they’re generated.
We are always on hand to help you steer clear of payroll problems. Whether advising on appropriate
software, or carrying out payroll for you, we are here to help.
Got a question?
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