A common payroll problem: and how to avoid it

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 activity.

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.