It is very irritating when HMRC accuses you of owing more PAYE than is actually due. This can happen when the HMRC computer has recorded a duplicate employment for an employee without ceasing the previous employment.

For example, William Smith is employed and is paid a regular salary of £2,000 per month. On the first FPS, he is recorded as William Smith. On a later FPS, he is recorded as Bill Smith. The HMRC computer will assume that William Smith and Bill Smith are two different people.

As the employment record for William Smith has not been closed, the HMRC computer will generate a PAYE charge for both William and Bill on the basis that the employer has paid out £4,000 in salary that month.

HMRC has recently provided tips on how to avoid duplicate employment records:

  • Use consistent employee names
  • Only include the start date on the first FPS when a new employee joins, do not alter that start date later
  • Use a unique payroll number for each employee
  • Do not reuse employee numbers
  • If an employee rejoins your payroll after leaving, give that person a new payroll number, and reset their year-to-date payment information to zero
  • If one person works two jobs for the same employer on two different payrolls, make sure that person has a different payroll number on each payroll
  •  Use the ‘irregular payment pattern’ indicator for any employee who is paid infrequently

Where new payroll software is used for the first time, or payrolls are merged, meaning new payroll numbers are issued for employees, the payroll ID ‘change indicator’ must be used. HMRC also recommends that the employer:

  • Enter the previous payroll number into the ‘Old’ field.
  • Enter the new payroll number into the ‘New’ field.

If an incorrect PAYE charge does arise, you need to first contact the HMRC employer helpline: 0300 200 3200. If the helpline can’t fix the problem, ask for the issue to be referred to HMRC’s charge resolution team.

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