HMRC Unallocated payments and credits

[AliceGB]

My organisation is in credit by £5k with HMRC and have been for some time but we don't know why.

HMRC, via the employer helpline, have suggested it's 1 of 2 possible reasons:

1. We disputed 2 charges that add up to the £5k and HMRC issued a notice of discharge - we have no evidence that we disputed these charges or that HMRC issued a discharge

2. Due to COVID19, HMRC wrote off a debt of around £5k via an Amended Penalty Determination - we did receive these types of letters but for much smaller amounts not exceeding £400.

They instructed us to wipe £5k off our next payment to resolve the issue. We explained that we cannot ask our accounts team to wipe off £5k without an explanation or evidence. They responded that HMRC would not be prepared to go through each payment made to reconcile. Instead they encouraged us to write to HMRC and request confirmation of why we were in credit.

We have written to HMRC (Employer Office, PT Operations, North East England...) but have yet to receive a response, it's been over 2 months so it may be wishful thinking that they would be in contact by now.

Has anyone else been in this situation? Is there any particular team this can be escalated to?

One more thing, whilst reviewing our accounts I noticed that they used a monthly PAYE payment to cover National Insurance Class 1A costs for 1 tax year, and the payment we made for the National Insurance Class 1A costs was used to cover our monthly PAYE costs. I asked them if they could reconcile the payments, they said it didnt matter and to move on...

 

[Bobbo]

We explained that we cannot ask our accounts team to wipe off £5k without an explanation or evidence.

Yes, you can. You* can instruct the accounts team to pay £5k less than is supposedly due for the month to use up the credit HMRC have seemingly ascribed to your organisation.

You (or the accounts team) may choose to continue to recognise a creditor for this £5k until such full resolution of it has been achieved.

* You haven't said what your position in this organisation is. It seemingly isn't part of the accounts team, but you surely have some authority over the accounts team to give such an instruction. If not then unclear why you're even involved in this matter.

 

[Daybooks]

It depends how much effort you want to put into it.

You can (and must) reconcile your PAYE liabilities to your Gateway account. You can match your liabilities to the charges recorded by them on the annual Statements and you can match your payments to the same statement and also to the payments schedule they hold. The latter will show how they have allocated payments. The former should identify any other charges (interest/penalties/other) applied by them.

If there are “assessments” which would normally be for not filing then these should be reversed by them if and when the actuals were submitted.

Your reconciliation will also include the Class 1A and 1B liabilities - these can have a tendency of not appearing on the Gateway account for sometime.

The answer will be there.

 

[David Griffiths]

The answer will be there.

I wouldn't put money on that. We had debt collectors turn up to a client trying to get something like £14k for unpaid PAYE. Completely wrong, and we sorted it out.

Nearly two years later and they turn up again, out of the blue, with no letters, demands, reminders, nothing. I spoke to the HMRC employee, pointing out that we had already dealt with this, and that I was logged in to the client's online record as we spoke, and there was no old debt shown.

His response? "Oh you can't rely on that!" The system was broken then and hasn't improved.

I would never tell a client that they "must" reconcile to HMRC's system. They should reconcile to their own reports and be sure that they've paid all that's due. Present that to HMRC if they coming looking for money, Trying to follow what HMRC is doing will likely be a long winded waste of time and sanity,

In the case in point, where HMRC say that less is owed, I'd reduce future payments to take account of their credit but leave it as a liability in the accounts.

 

[Daybooks]

I wouldn't put money on that. We had debt collectors turn up to a client trying to get something like £14k for unpaid PAYE. Completely wrong, and we sorted it out.

Nearly two years later and they turn up again, out of the blue, with no letters, demands, reminders, nothing. I spoke to the HMRC employee, pointing out that we had already dealt with this, and that I was logged in to the client's online record as we spoke, and there was no old debt shown.

His response? "Oh you can't rely on that!" The system was broken then and hasn't improved.

I would never tell a client that they "must" reconcile to HMRC's system. They should reconcile to their own reports and be sure that they've paid all that's due. Present that to HMRC if they coming looking for money, Trying to follow what HMRC is doing will likely be a long winded waste of time and sanity,

In the case in point, where HMRC say that less is owed, I'd reduce future payments to take account of their credit but leave it as a liability in the accounts.

It will be there. It is the beauty of the twofold effect of every business transaction and why “supplier statement” reconciliations – hovever complex they may appear – do work!

Whilst “must” might sound “strong” I wouldn’t suggest anything that I wouldn’t do myself.

Whilst reconciling to your own internal controls has merits the concept of the external “supplier reconciliations” is unbeatable. Reconciliation is a means to an end – with ultimately an agreement and alignment. A concept which had the Post Office grasped would have saved the tax payer a small fortune.

It won’t stop HMRC from being incompetent but it will give you the proof and confidence you need.

If it is £5k exactly I would be looking at the employer allowance claim versus payments.