quick question regarding pay - The Book-keepers Forum (UK)

simba-ali · Member

quick question regarding pay

Shamus · Forum Moderator & Expert

Hi,

Was this not covered in this thread : http://www.book-keepers.org.uk/t60271840/hopefully-someone-can-help/

If the other thread didn't answer your question it may be worth asking more questions in that thread as asking it elsewhere people will just end up covering the same ground again.

kind regards,

Shaun.

simba-ali · Member

I understand how it relates to that previous thread but alot of that problem has been resolved. My Payslips are correct to my bank statements in most cases now apart from this 14p difference every so often.

lainy · Veteran Member

The pay in your bank account, should match the pay on your payslip. yes occasionally different machines will round up different and a few pence difference can occur, when working out timesheets etc, and yes if the hourly rate is something like 11.095 it may make as much as 14p difference, but even so, if the person paying the money uses the information from the payroll (which is the point of the payroll), then they should still match. sometimes an error may have to be adjusted the next month, but you should be told why. I would find out who is doing the payroll and who is doing the banking and try and find out why they don't match. yes its only 14p, but your boss obviously doesn't think it matters and it should. the figures for the bank should be taken from the figures on the payslip, if they are not, then why not? From your point of view I don't think 14p would make much difference to HMRC, but if its regular, is it the bank rounding up figures? in whose favour?

Its up to you, but I would query it, and then its up to the business owner to sort out.

Very best wishes Happy New year Elaine

Tom McClelland · Senior Member

The pay you get in your bank account should always match your payslip perfectly, to the penny. I've never heard of a situation where it doesn't, before now.

This should also matter to your employer, because they can eventually expect a query from HMRC if it doesn't match to the penny...

Your employer files your net pay with HMRC (as part of payroll RTI) , along with encrypted details of the bank account it was paid into. HMRC reconciles this with BACS returns from the banking system and if they don't get a match then they'll ask the employer what is going on.

Furthermore if I were your employer I'd be wanting to understand why your payment sent to the bank is different from your payment shown in the payroll system. OK a 14p error is insignificant as such, but the lack of control implied by even 1p difference suggests that there is something wrong with their payment systems. What if the error is £140,000.00 next week, rather than 14p?

simba-ali · Member

I kind of know the reason. It's because I'm salary based and my pay is the same each month. So its set-up to pay the exact same each month. But sometimes there's a slight pence difference on my wageslip which doesn't get picked up on. Annoying I know but what does these mean in terms of hmrc? Simba ali

Tom McClelland · Senior Member

simba-ali wrote:
I kind of know the reason. It's because I'm salary based and my pay is the same each month. So its set-up to pay the exact same each month. But sometimes there's a slight pence difference on my wageslip which doesn't get picked up on. Annoying I know but what does these mean in terms of hmrc? Simba ali

If HMRC were to find out they wouldn't like it, but as employer infractions go it is a very minor one. HMRC wouldn't be annoyed with you at all; you've done nothing wrong. But your employer isn't applying the rules correctly, albeit they could probably argue that the difference is not significant and might well avoid a penalty if they promised to stop doing it when found out.

Slight variations in net pay from month to month, even though salary is unchanged, are a completely normal part of the way the PAYE system works.

-- Edited by Tom McClelland on Thursday 31st of December 2015 01:08:38 PM

simba-ali · Member

Thank you for your advice. It's hard to bring this up with my employer because as you can imagine I say something and it gets fixed for that month then it can happen again. Gets tiresome to keep doing it. My main concern was answered by you in your post whether there would be implications on me from hmrc. Simba ali

Cheshire · Master Book-keeper

Sounds like they are paying you by standing order (which can only be used for fixed amounts on a regular basis) INSTEAD of using Bacs or just transfers, which of course would allow for changes to payments. I have seen this before but usually the Accounts team make up the shortfalls with a one off payment just before the end of the tax year. They really shouldnt use standing orders as that is not what they are for. You should just ask them for the shortfall at the end of the tax year.

The issue of the implications re HMRC were, Im pretty sure, covered off in the two posts that were merged into one that Shaun has linked in above.

Tom - long time no see, I hope you are keeping well!!!!!!!!!!

simba-ali · Member

Sorry Tom, I was just reading one of your replies about how hmrc deal with wages and was wondering what you mean by bacs return? Do they access my bank Account? Or do they match my employers statements to what's been declared? Also there is no chance of me getting any penalty charges? Simba ali

Cheshire · Master Book-keeper

BACS is just a processing method used by companies to make payments via the Bank, nothing for you to be worried about.

Your other question has already been answered several times.

TaxAdviser · Veteran Member

Tom McClelland wrote:
The pay you get in your bank account should always match your payslip perfectly, to the penny. I've never heard of a situation where it doesn't, before now.
This should also matter to your employer, because they can eventually expect a query from HMRC if it doesn't match to the penny...
Your employer files your net pay with HMRC (as part of payroll RTI) , along with encrypted details of the bank account it was paid into. HMRC reconciles this with BACS returns from the banking system and if they don't get a match then they'll ask the employer what is going on.

Furthermore if I were your employer I'd be wanting to understand why your payment sent to the bank is different from your payment shown in the payroll system. OK a 14p error is insignificant as such, but the lack of control implied by even 1p difference suggests that there is something wrong with their payment systems. What if the error is £140,000.00 next week, rather than 14p?

See bolded part above - this is not correct. This comment is misleading and scary for any reader.

Shamus · Forum Moderator & Expert

Edging my bets here but I think that you'll find that Tom's right as he wrote 12pay so he'll know what gets transmitted and checked!

Leger · Master Book-keeper

It wouldn't work with Moneysoft Shaun because (at least in my case) no BACS details are given.

It may certainly be the case for bigger companies and payroll bureaus who do BACS as part of the payroll, these details are included, but as you say, Tom will know the nitty gritty.

Cheshire · Master Book-keeper

Relates to the hastag BACS - ie 'proper Bacs' facilities rather than the odd transfers which are done via same day payments process but with some Banks are reported as 'bacs'.

simba-ali · Member

So could I expect a letter or phone call from hmrc if this difference is pick up on. Would they not wonder why I didn't say anything? Paye confuses me a little because if the employer deducts the tax and pays the wage but a situation like this happens can the employee be held accountable? Simba ali

Cheshire · Master Book-keeper

simba-ali wrote:
So could I expect a letter or phone call from hmrc if this difference is pick up on. Would they not wonder why I didn't say anything? Paye confuses me a little because if the employer deducts the tax and pays the wage but a situation like this happens can the employee be held accountable? Simba ali

These points have ALL been covered many many times already in the earlier thread. It does appear that you do not believe the people who have answered you in this and your two earlier threads - perhaps hoping someone on BKN will come on and advise you differently. But this is unlikely to happen, so can I, once again, suggest that if you are not happy with the responses so far and are THAT concerned then for your own peace of mind ring HMRC - they wont bite and in fact can be really helpful and friendly. Although I would be tempted to leave it until after January as (like us guys on here) we are all bombed with work in January every year.

-- Edited by Cheshire on Tuesday 5th of January 2016 07:21:12 PM

TaxAdviser · Veteran Member

You should take this up with your employer, HMRC will not be interested or be able to take any action. Also there is no requirement to report an employee's bank details with their monthly pay so I don't know why 12Pay are doing it. HMRC cannot reconcile an employer's PAYE payments to their RTI submissions, they won't be trying to match an employee's pay to their bank.

Cheshire · Master Book-keeper

Hi Hannah
This poster has raised the same question time and time again, in several posts. We have all said take it up with the employer. Thes reason. I suggested he should speak to HMRC was because he clearly wasn't believing any of us as he kept asking the same question.....HMRC showing very little interest when he phones them might persuade him that the response to his first post was as wel all suggested. This has being going on for months. Just thought you should know the background.

Leger · Master Book-keeper

TaxAdviser wrote:
You should take this up with your employer, HMRC will not be interested or be able to take any action. Also there is no requirement to report an employee's bank details with their monthly pay so I don't know why 12Pay are doing it. HMRC cannot reconcile an employer's PAYE payments to their RTI submissions, they won't be trying to match an employee's pay to their bank.

Joanne hit the nail on the head upthread. Its connected to the BACS hash code and basically it's a check that the employer is making correct payments to employee bank accounts. If you are paying your employees through a BACS file in the payroll then you must include the hash code. All payroll that supports BACS will have the hash code, not just 12pay

To allay fears that HMRC can see what goes into individuals accounts they can't, as it only checks the sort code, not the account number. I would say in Simba's case they aren't using BACS, otherwise the payments would be correct.

I agree with Hannah, it's an issue that should be taken up with your employer, and although it's only 14p, if that's replicated throughout the firm, it could add up to a fair bit. As Joanne said, its probably a case of a standing order without taking into account tax fluctuations.

Simba, you can't be penalised, so you have nothing to worry about.

-- Edited by Leger on Tuesday 5th of January 2016 10:38:54 PM

Cheshire · Master Book-keeper

Hi again Hannah
Here is some info on the hastag bacs process. Only large employers use it, although I'm not sure if it's been abandoned to cross check payments. Seems a bit pointless given such a large percentage of PAYE users are not required to use it. But this is why it's built into 12pay and quite a few other large user payroll systems.www.gov.uk/government/uploads/system/uploads/attachment_data/file/390894/RTI_Hash_Cross_Reference_Guidance.pdf

Cheshire · Master Book-keeper

John we crossed in the post!!

Oh and don't think that HMRC cannot see what they need....have you seen the new lists of requests to be made of Banks, never mind the reports they already get, which include such things as when interest over a certain amount is reported .....and no it's not a high amount. Another way HMRC can see if you are lying on a self assessment. Big brother....yep!!

Leger · Master Book-keeper

Hi Joanne

We certainly did. I had taken ages to type that reply, and when I hit submit, you had sneaked in lol.

Nope on the bank stuff, I wasn't aware. Whats the interest level, I'm guessing 3 figures if not 4?

Shamus · Forum Moderator & Expert

Hi John,

sure that Joanne knows more about this than myself but here's my understanding.

The new HMRC system is called Connect. It cost £80 million to build over a period of seven years and hypathetically it is geared to be notified of every penny that banks pay in interest... But thats the tip of the iceberg!

I've been away from that world for a little while so not sure of the exact details of reporting requirements

Other feeds into Connect will be Estate Agents needing to automatically supply details of all rental properties. All credit card entries for the past four years can (and I expect will) be trawled through by automated bots that try to peice together every part of your financial status.

My impression is that the main one that they are going for initially is underdeclared rental income and other property related taxes as they seem to be aiming to calm that part of the market that in general is fueling the rise in house prices.

The Connect software really is the equivalent of Cyberdyne systems of our age... Skynet... Sorry, Connect goes live this year. By 2017 it will be connected to similar systems accross 60 countries all sharing data which at the very least will track people who have multiple undeclared properties sparking additional property tax demands.

The estimate is that it will be completely worldwide by 2020.

My view... We'll be seeing a lot more people with their finances tucked under their mattresses.

And this time I really am going to bed.

Cheshire · Master Book-keeper

Hi John, if only the reporting started at 4 digits! It's much much lower and they have been reporting for many years, as long as I was in the Bank for sure. I recall seeing the printouts in the days when everything was still provided in black and white rather than electronically, even at the old bank branch levels.

I've read some interesting and scary stuff about Connect last year. My understand is that one of the biggest features is to look for income disparities. It will process information about your bank account balances and income, and match this with other information mainly your tax return and, for example, and your PAYE data submitted by your employer. I can see problems with it but it is after all meant to collect missing revenue, so it's down to how HMRC interpret the information when they get it. As we all know, they aren't well known for believing your innocence until proven guilty! Expect more investigations over the years, assuming the thing doesn't crash and burn like the CSA!!

Shamus · Forum Moderator & Expert

I'm not sure that it will be HMRC who do the investigations Joanne.

Tax Credits are policed by an American company who are only paid as a percentage of the money that they collect so there is no incentive to err on the side of innocence.

I would expect future arrangements to follow a similar approach where mass investigations are outsourced on a no win no payment basis.

Its worth noting I feel that Connect is not HMRC's brain child but rather the result of a European Directive with the intention both of increasing member countries tax yield (presumably so that they pay more to Brussels!) and also furthering the fight against terrorism and organised crime (including the growing issue of cyber crime).

The issue that I see facing Connect and it's equivalents elsewhere accross the globe will be information overload which will mean outsourced investigation companies will need many more staff to handle, meaning that they will need to find more people guilty to justify their additional costs.

Good idea if extremely intrusive and has all the potential to be a nightmare for a lot of (mostly quite innocent) people.

May bring in a lot more revenue for accountants dealing with these companies on clients behalf though! (silver linings and all that)