Monthly compliance

By Tolley in association with Vince Ashall

The following Employment Tax guidance note by Tolley in association with Vince Ashall provides comprehensive and up to date tax information covering:

  • Monthly compliance
  • Attachment of earnings orders
  • Pension contributions
  • Other deductions

Monthly compliance is generally concerned with PAYE compliance, although an employer may also need to comply with other legislation.

PAYE compliance is concerned with paying over to HMRC the correct amounts of tax, national insurance (employees’ and employer’s) and student loan deductions. This has taken on more importance under RTI, as HMRC will calculate what they think is due from the FPS and EPS submissions for each tax month.

To assist with PAYE compliance, regular reconciliation of tax, NICs, student loan deductions and statutory payments recovery should be undertaken. This should be on a tax month basis.

See Example 1.

After the analysis of the payments to be made to HMRC ‘this period’, the payments should also be reconciled against the cumulative year to date figures. This is to ensure that no errors have occurred, eg owing to manual adjustments or late payments. Other causes of being unable to reconcile the figures are overpayments and late notification of starters. As these tend to be made outside of the normal payroll cycle, it is easy for the additional tax and NI deductions to be overlooked and excluded from the totals.

Although the old P35 no longer exists under the Real Time Information (RTI) process, the equivalent reconciliation should still be undertaken to ensure that the correct payments are made over to HMRC. An aspect of RTI not to be overlooked is that HMRC will now know, from the FPSs submitted, how much PAYE, NICs, etc that an employer is due to pay over each tax month. This may vary if an employer is reclaiming statutory payments. It is important that the EPS detailing this information is submitted by the 19th of the month following the end of the previous tax month.

If this deadline is not met, the employer will need to overpay in that tax month, ie pay over the sums due

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