Improving the Operation of Pay As You Earn (PAYE)
Many of you submitted comments to the Discussion Document published last summer on Improving the Operation of PAYE, and I am very grateful to you for that. We have taken your comments and views on board and have now published a consultation document Improving the operation of Pay As You Earn (PAYE): Collecting Real Time Information, on the HMRC website today.
I’d be grateful if you would send responses to the following address no later than Monday 28th February 2011: paye.consultation@hmrc.gsi.gov.uk
We will also be holding a series of consultation workshops and seminars during the consultation period. If you would like to attend (or host) one of these workshops please ring
Employers: 0845 6032691
Software developers: 01274 539666
Your involvement in this discussion is important to us, and we hope that you will continue to play a key part in the consultation process.
Revised P14 Matching Rules for 2010-2011 P14 information
We are introducing amended matching rules for 2010-2011 P14s to increase the number of these that successfully match to employment/pension records.
Where there is only one employment for one PAYE Reference and we only receive one P14, then that P14 will match to the employment irrespective of the works number held on either the employment or the P14. The works number from the P14 will only update the works number on the record where the works number field is blank.
The revised matching rules will only be implemented where multiple employment/pension records are held at the same PAYE Reference. These are as follows:
Where an exact match is not obtained then HMRC will manipulate the works numbers in order to achieve a match. This will be by:
Where this results in a number amounting to five characters or greater, this will be used in all subsequent matching processes. Where this results in less than 5 characters then the originally supplied number will be used in subsequent matching processes. We will then check whether the whole of the manipulated works number appears in sequence as a string within the other works number. For example:
Manipulated P14 works number = 34567
Manipulated Employment 1 works number = 2345678
Manipulated Employment 2 works number = 8765432
This would match the P14 to Employment 1.
Where this process does not result in matching a P14 to an employment we will use one or more pieces of the other information from the P14 and the employment shown below in order to find an exact match.
- Start date;
- End date;
- Tax code used;
- P45 Part 1 details where previously received;
- P60 details
where these have been attached to the employment.
At each stage if a match is found then the matching process ceases and the P14 is matched to the employment.
If, after using all the information listed, we continue to be unable to achieve a match, then an employment record will be created from the P14. The works number used to populate the employment record will be the one supplied and not the manipulated result. In any other circumstances, works numbers from P14s will not automatically be used to update the employment record.
Ensuring Employer Payments are allocated correctly
Employers often tell us that they don’t understand the payment allocation process within HMRC and that it is difficult for them to track payments once they arrive in HMRC.
It is important employers understand they cannot send their payment into HMRC without telling us what it relates to and trust that it will land where intended. The Accounts Office (AO) reference must accompany each payment but depending on when the payment is made, for example earlier or later than we expect it, employers will also need to tell us the year and month that the payment relates to. Otherwise payment will be automatically allocated to the current month and current year.
For payments made by bank giro, at a post office or by post, then the correct payslip should be used for the month or quarter being paid. Payslips contain pre-printed reference information and ensure that any payment is correctly allocated.
If a payment is made by Direct Debit, debit or credit card over the internet using BillPay, Bacs Direct Credit, Internet banking or CHAPS then additional information needs to be added to the AO reference when making an early or late payment. This ensures the payment is allocated to the correct period.
For example a payment sent with only the AO reference for 2010-11 month 03 due on 22 July and:
- received before 6 July will be allocated to month 2
- received after 5 August will be allocated to month 4.
So when sending us a payment either early or late, you should use your AO ref followed by the year ending and month number that the payment is intended for with no spaces between i.e. 123PA000123451103
If payment is always being made in time for the 22nd of the month or quarter that it’s due, remembering to send in payment earlier where 22nd falls on a weekend or bank holiday, then only the AO reference needs to be quoted.
You can find further guidance on how to do this by visiting http://www.hmrc.gov.uk/payinghmrc/paye.htm
You can check also check your reference at www.hmrc.gov.uk/paymentreferencechecker
We appreciate that moving payments is a sensitive issue; banking and allocating payments are core objectives for our Debt Management directorate and we accept that educating employers about how our systems work and the best way to submit information is the most effective way to prevent problems for employers and our staff. We are looking at these issues in more detail as part of a Payment Allocation review which will identify further improvements.
You can find lots of useful information about how to pay on our website using the links above or the general point of contact for employers about payment methods is the Payment Enquiry Helpline. Their number is shown on payslip booklets, paying electronically letters and the list of contacts on HMRC website. However if a debt is already overdue, employers should contact Debt Management on the number shown on the most recent letter.
