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PAYE Underpayments


We deal with payroll for a lot of businesses and have found over the last 2 to 3 months that several of them have been receiving PAYE underpayment notices. Many of these are inaccurate and relate to incorrect allocation of Class 1A NIC payments on expenses and benefits which had to be paid by 19th July and are being recorded in the current payroll year rather than the previous one.

Employers are being notified in writing that they have underpaid for 2012-13 but are not being notified that they have overpaid for 2013-14. The underpayment ends up being larger than the amount paid because late payment interest is added.

Employers should contact HMRC to advise them that the payment has been wrongly allocated and request that it is recorded against the previous year. Any interest added will be removed if the payment was made on time.

This is extremely frustrating and creates work for employers and ourselves as payroll agent to correct a simple posting error. You can avoid this happening by ensuring you use last year’s PAYE reference when making a Class 1A NIC payment.

Related Tags:  Class 1A NIC |  HMRC Underpayment Notice |  PAYE |  Payroll | 
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Unit 21 Portway Business Centre
Old Sarum, Salisbury

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