Payroll PAYE deductions

[minghis]

A question if I may - when you do payroll for staff (we use Xero) who decides the actual amount of PAYE that should be deducted? We obviously have their NI numbers and all other details, but I'm trying to figure out who is actually responsible if their tax is not correct on the payslips.

Or put another way, if staff complain they have been asked by HMRC to repay tax owed that hasn't been taken from their pay, who is usually to blame, us or them?

I'm just trying to understand how it all works so that if I have to get involved I sound like I know what I'm doing....

 

[Owen Parry]

While PAYE is a HMRC system employers are responsible for making sure the correct deductions have been made with the tax codes that have been issued to them for employees.
Only if the information supplied, I.E: tax codes, is incorrect is the onus on HMRC.

 

[Newchodge]

When an employee starts they provide a P45 which tells the employer what tax code to use or they complete a new starter form. Either way the payroll software will apply the appropriate tax free amount if the employer enters the correct information. If the codes used are wrong HMRC will notify the employer and require that they change the code used. As long as they do that they will be deducting the correct amount of tax from this employment. That is the employer's only responsibility.

An employee may have many reasons why they have underpaid tax, all of which are a matter between them and HMRC and nothing to do with the employer , provided they have used the correct codes.

EDIT: Tax has little to do with the NI number.

 

[minghis]

Thank you all, this helps.