Don’t pay HMRC too early!

Since Real Time Information (RTI) started, some employers have been experiencing difficulties in reconciling the difference between the tax they think is due, and the tax HMRC think is due according to the RTI submissions. As I mentioned in my last blog, it is vital for employers to use their correct PAYE Accounts reference for the corresponding tax year and month, but it has now become evident that employers must also pay HMRC as well as submitting any Employer Payment Summaries (EPS) if applicable, within a certain time frame to avoid payments being allocated to incorrect periods.

HMRC derives an employer’s ‘monthly charge’ from values reported in RTI returns comprising the full payment submission (FPS) and the employer payment summary (EPS). An EPS submission is due if an employer needs to report any difference in PAYE/NIC reported in the FPS; such as statutory maternity pay reducing the NIC liability or CIS deductions to be added to the tax liability. EPS submissions do not include tax month data, only year-to-date data, so the timing of submitting the EPS is important. Sending the EPS too early or too late may result in HMRC applying it to the wrong tax month, thereby affecting the ‘monthly charge’. For example; if a monthly payroll is processed on 15th October for the month of October, and the FPS and EPS submissions are also submitted on 15th October for October, HMRC may assume the EPS refers to September as it has been received before September’s payment deadline of 19th October. So the ‘window’ for submitting EPS submissions and paying HMRC should be from 20th of current month to 19th of the following month. If two EPSs are submitted within the same time frame, one will apparently overwrite the other.

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