Paying HMRC correctly

Since April 2013 and the introduction of RTI (Real Time Information), HMRC know exactly what each employer owes them every month and are quick to chase for late payments or apparent underpayments. We have seen many cases recently of our clients being sent demands for underpayments when in fact they have paid the correct amounts, but the payments have been misallocated to previous tax years due to the incorrect PAYE reference suffix being used when they make payments. It is vital that you use the correct PAYE reference each time you make a payment to HMRC.

Each employer has a 13 character Collection or Accounts Office reference which will be given by HMRC when a new PAYE scheme is set up and will be shown on the payslip booklet. For example 123PA00012345. This 13 character reference will never change, however the all important suffix will change each month, as it signifies the tax year and tax month your payment refers to.

The 4 digit suffix you need to add on the end of your Accounts Office reference will be made up of 2 digits for the tax year and 2 digits for the tax month. For tax year 2013-14, the suffix is 14 and for April the suffix is 01 for the first tax month of the year, May is 02 etc.

There is only one account now for all payments which is AO Cumbernauld, sort code 08-32-10, account number 12001039. Payments by cheque should be sent with the relevant payslip from your HMRC paying in booklet (and we recommend you write the full 17 digit reference on the back of your cheque) and received by HMRC no later than 19th of the following month or 22nd if paying electronically.

By ensuring you use the right PAYE reference each month will avoid late payment notices, misallocation of funds to wrong tax years and no phone calls from HMRC!

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