What to do if HMRC have the wrong figures
If HMRC have the wrong figures for what the employer owes, or what an employee has earned, then there are three things to check:
- the data entered into Payroll Manager
- the data sent by Payroll Manager in the RTI returns
- the data held by HMRC
In order to better understand how to check the data it is best to first have an understanding of how RTI works.
How RTI works
There are two types of RTI returns:
- Full Payment Submissions (FPS) which tell HMRC about what employees have been paid, and what tax, NIC etc. has been deducted off them; you send an FPS return every time employees are paid
- Employer Payment Summaries (EPS) which tell HMRC about amounts the employer is claiming back from them, such as SMP recovery. You only send EPS returns when there is something new to claim back from HMRC
Most issues come about because of discrepancies with employee information, so it is best to focus on the FPS.
An FPS return contains a series of separate individual employee records. These figures include the employee’s pay, income tax, employee NIC, employer NIC, student loan etc. Each employee record contains two sets of figures, one for the current period, and one with the year-to-date figures.
Example: If an employee earns £1000 per month:
The FPS for month 1 will show that the employee have been paid £1000 in that month, and £1000 in the year-to-date. When HMRC receive this FPS, because this is the first month of the year, they will create an employee record with £1000 year-to-date pay (the FPS and HMRC record will obviously contain all the other figures for tax, NIC etc. as well).
The FPS for month 2 will again show that the employee was paid £1000 in that month, and have been paid £2000 in the year-to-date. When HMRC receive that FPS then they should update the existing employee record to have £2000 year-to-date pay.
How HMRC calculate how much is owed by the employer
An FPS does not contain totals for the employer as a whole, instead it consists of a series of individual employee records. The total liability for the employer is then calculated by HMRC, by totaling up the figures in the individual employee records present within the FPS.
HMRC calculate what the employer owes them by adding up all the tax, employee NIC, employer NIC and student /postgraduate loans from all the employee records, then taking off any amounts reported in the EPS returns (such as SMP recovery).
Checking the data
If there is a discrepancy between the figures that you think you have sent to HMRC and those figures that HMRC are saying they have on their own systems, then there are three steps that you need to follow to resolve the issue.
Step 1 of 3 : Checking the data entered into Payroll Manager
You should initially look at the ‘Pay Details‘ screen to check that the data entered there is correct. It is also worth looking at various reports to check that the data has been entered correctly. The ‘Analysis – Employee Pay Details‘ and ‘Analysis – Employee Pay Totals‘ reports allow you to view the data for each employee for both the current and previous pay periods. If having checked these reports you are happy that the data is correct then proceed to step 2, otherwise correct the data so that the next RTI return will provide HMRC with the correct year-to-date figures (see section ‘What happens if you have reported the wrong figures by mistake‘, below).
Step 2 of 3 : Checking the data sent by Payroll Manager in the RTI returns
Payroll Manager stores the details of each RTI submission in the ‘Submission Log‘. Please see our Submission Log guide for details. If having checked the submission log you are happy that the correct data has been sent to HMRC then then proceed to step 3 – otherwise correct the data so that the next RTI return will provide HMRC with the correct year-to-date figures (see section ‘What happens if you have reported the wrong figures by mistake‘, below).
Step 3 of 3 : Checking the data held by HMRC
HMRC do not provide any mechanism by which either you or the software can view the data held by them, so if you have checked that you have the correct data entered, and that the correct figures have been sent in the RTI returns, then you will have to get HMRC to check their own figures.
To do this you need to contact the Online Services Helpdesk on 0300 200 3600 and ask them to raise a “disputed charge”.
If the Online Services Helpdesk ask you to contact your software supplier (their standard response to most queries), then explain that you have already done so, and that you have checked that the data submitted in the RTI returns is correct, so the problem must be in their records. It is then the responsibility of HMRC to resolve the issue.
What happens if you have reported the wrong figures by mistake?
If you report the wrong figures by mistake then you should follow HMRC’s advice https://www.gov.uk/payroll-errors/correcting-your-fps-or-eps which says “To correct a mistake made in the current tax year, update the year-to-date figures in your next regular Full Payment Submission (FPS)”.
If you have accidentally reported the wrong pay in a particular pay period you will need to correct the figures in Payroll Manager for that pay period. The FPS for the next pay period will then report the corrected year-to-date figure to HMRC. More detailed guidance on how to do this can be found in the following guide: Payroll corrections and RTI returns
What this means in relation to HMRC errors
All the user and software can ever do is report the correct figures to HMRC. If someone earns £1,000 per month then the correct FPS return for month 7 can only report £7,000 year-to-date pay – anything else would be the incorrect figure.
All you as the user need to do is enter the correct figures into the software, and all the software needs to do is to submit the correct figures to HMRC. If both those have been done correctly, but HMRC shows the wrong result, that can only be because of an error at HMRC’s end.