Have you had your disputed liability confirmed in writing yet?

Over the last few weeks HMRC has sent around 12,000 letters to PAYE schemes that it recognises as being formally in dispute about their current, or prior year, PAYE liabilities.

Since the introduction of RTI, complaints from employers about the discrepancies between the amounts they know to be owed to HMRC each tax month derived from the FPS and EPS files as opposed to those calculated by HMRC have been widespread.

Discrepancies are caused for a number of reasons: the creation of duplicate records by HMRC on receipt of an FPS (an employee’s tax, NI and student loan deductions are added in twice to the employer’s liability), FPS and EPS files not being actioned and payments being allocated to clear prior year amounts or to the wrong PAYE scheme.

Depending of course upon the size and complexity of the scheme, discrepancies can range from a few hundred pounds to many millions of pounds and can alter every few hours! Employers and agents who are absolutely certain that they have paid over the correct amounts and mindful of automated late payment penalties being introduced in April 2015 are able to formally lodge a dispute in relation to the liabilities HMRC are holding.

The disputed charges team were set up by HMRC last August and they claim at its height the team was only dealing with 19,000 disputes out of of a total of over 1.6m PAYE schemes. The difficulty with this assertion is the definition of the dispute being formally recognised. Over recent weeks that has become clearer. All schemes that HMRC recognises as being in dispute ie they are investigating what they have done to corrupt the data, have received a letter from HMRC acknowledging they are in dispute still and apologising for the delay in resolving the issue, with a promise to confirm in writing when the matter is resolved.

Unless you have received one of these letters your dispute is not being formally recognised and investigated. Why dos this matter? It matters because only if the dispute is formally under investigation do HMRC staff set a marker to prevent late payment GNS messages being issued that from April 2015 will lead to automated penalties and in addition no other compliance activity can be undertaken from letters to bailiff visits. I would urge any PAYE schemes that have not received a letter to contact the Employer Helpline and ensure that they get their PAYE scheme agreed as in dispute, until we do this the true scale of the data issues will not be clear and HMRC will not be given the required resources to sort out the result of the data corruption and the root cause of the problems with their systems.