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Ensuring employer payments are allocated correctly
Friday, December 10th, 2010
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The latest weekly informal update (dated 3 December) from HMRC to employer representatives provides information on two subjects. One of them is reproduced below; the other is a separate news item.
Employers often tell us that they don’t understand the payment allocation process within HMRC and that it is difficult for them to track payments once they arrive in HMRC.
It is important employers understand they cannot send their payment into HMRC without telling us what it relates to and trust that it will land where intended. The Accounts Office (AO) reference must accompany each payment but depending on when the payment is made, for example earlier or later than we expect it, employers will also need to tell us the year and month that the payment relates to. Otherwise payment will be automatically allocated to the current month and current year.
For payments made by bank giro, at a post office or by post, then the correct payslip should be used for the month or quarter being paid. Payslips contain pre-printed reference information and ensure that any payment is correctly allocated.
If a payment is made by Direct Debit, debit or credit card over the internet using BillPay, Bacs Direct Credit, Internet banking or CHAPS then additional information needs to be added to the AO reference when making an early or late payment. This ensures the payment is allocated to the correct period.
For example a payment sent with only the AO reference for 2010-11 month 03 due on 22 July and:
- received before 6 July will be allocated to month 2
- received after 5 August will be allocated to month 4
So when sending us a payment either early or late, you should use your AO ref followed by the year ending and month number that the payment is intended for with no spaces between i.e. 123PA000123451103
If payment is always being made in time for the 22nd of the month or quarter that it’s due, remembering to send in payment earlier where 22nd falls on a weekend or bank holiday, then only the AO reference needs to be quoted. For further information see:
How to pay PAYE/Class 1 National Insurance contributions
HMRC NIC Reference checkers
We appreciate that moving payments is a sensitive issue; banking and allocating payments are core objectives for our Debt Management directorate and we accept that educating employers about how our systems work and the best way to submit information is the most effective way to prevent problems for employers and our staff. We are looking at these issues in more detail as part of a Payment Allocation review which will identify further improvements.
You can find lots of useful information about how to pay on our website using the links above or the general point of contact for employers about payment methods is the Payment Enquiry Helpline. Their number is shown on payslip booklets, paying electronically letters and the list of contacts on HMRC website.
However if a debt is already overdue, employers should contact Debt Management on the number shown on the most recent letter.
Further information:
HMRC’s weekly employer update 03 December 2010
