Hi everyone, I'm hoping someone with more experience of dealing with clients can help me handle this.
I took on a client's payroll and in the rush of getting the year to date figures from the previous accountant, I didn't check how many hours each employee worked. I subsequently got the hours, but stupidly didn't check for a few months and it seems that one employee is still being paid the NMW for 17/18 of £7.50 per hour. I've informed the client, amended the rate going forwards and calculated the arrears but I need to speak to the client later to explain and I'm not sure how to play it. Yes it was the previous accountant's fault that they were underpaid for over a year, but I should have noticed sooner :(
Any advice would be great. Should I hold my hands up or try to pass the buck a bit. I keep being told I'm too nice and honest, but everything I've done since taking over the payroll is my fault, so I feel like I should take my share of responsibility.
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All thoughts are my own and should not be used as professional advice.
Hi Rachel
Just a quick one first off - what age was this individual at all points of the process (NMW rate) change? I only ask because they may well have been paid higher than the bracket applicable to them in the earlier days and therefore its only now (if at all) that they are below.
You need to be honest about the error, your pat in it, but also state the period when it should have been changed and then state 'that was before my time, so I cannot comment on that aspect furthre' or some such line. So you are not looking like you are passing the buck but are showing where part of the blame lies and then leave it up to the client as to what legal/other action they wish to take against the former Accountant.
Bear in mind that there is also the responsibility on the part of the employer to ensure his staff are paid at the relevant NMW rates.
You will need to advise your PII providers.
You will need to re-wind the payroll for this tax year and re-issue payslips and submit the corrected RTI reports to HMRC. How you do that depends on your payroll software.
The problem you have is how you re-wind prior years as I think the time is now passed for 2018/19 - one to check out. Obviously clearly too late for earlier. So that leaves an issue potentially that the employee amy be paying more tax in one hit (albeit may gain from the uplift in the PA - only you will know that), so you might have to provide some compo for that, or assistance at the very least.
To be honest , I would do some digging in the HMRC payroll manuals for guidance.
Ensure you are copied in to any relevant staff contracts, do a fact check now for hours worked/holiday rights etc for any verbal changes to the contracts.
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Thanks Joanne, that's a huge help. I'm pretty good with the technical side of things, but only just learning how to actually deal with clients myself!
The guy is 30, I already double checked that! Thankfully, even if I were to include all the arrears this month, there is no tax due as he only works 2 days a week so is well under the allowance. I've also checked with Moneysoft and I don't have to correct any RTI, just send the FPS with correct YTD figures going forwards.
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All thoughts are my own and should not be used as professional advice.
I'm just checking whether you are aware that from the beginning of this tax year, any employees that are on an hourly rate should have their hours recorded on the payslip.
Hi John, thanks for that. I was aware, but I wasn't told initially that they were on an hourly rate, just £x per week. I've amended the payslip going forwards to show the proper information.
Thanks for all the help guys, I won't be making these mistakes again! I appreciate all the sage wisdom :)
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All thoughts are my own and should not be used as professional advice.
