Payroll HMRC submissions, payment date and tax month number
Problem reported by Simon Jackson 2 years ago
After a late night, a lengthy call to HMRC and a very helpful call to ClearBooks, I think there are some opportunities for easy improvements with Payroll.
I forgot to do payroll in October (thankfully my business only employs me!) and late on the 8th November I played 'catch-up', processing my October pay and setting up my November pay.
Forced Acknowledgement of Late Reporting and Potential Penalties
I forgot to change the Payment date when processing the October pay, and I didn't pay enough attention to the HMRC submission until my finger was already pushing down on the Send to HMRC button... I'd completely ignored the Late reporting reason section!
I think it would be useful for Payroll to force the user to acknowledge the 'late reporting' (Payment date is earlier than today's date) at either or both of these points in the process:
- When clicking Complete on an employee's Payrun for [employee name] page, generate one of ClearBook's 'warning' messages at the top of the page in a yellow (or maybe red?) box, requiring the user to click Complete a second time (like when happens when creating an invoice with a duplicate reference, for example), and/or
- Force the user to select an option in the Late reporting reason drop-down list (as above); this can simply be achieved by having a new, default selected option of Select an option..., which if selected when clicking Send to HMRC just generates an error and doesn't do the send.
Having these 'forced acknowledgements' of a late reporting, the potential (very likely) of penalties can hopefully be avoided.
Don't Accept Invalid Payment Dates
On my second processing of October's pay, I set the Payment date as the day after, being the 9th November. Payroll accepted this date and on the Send to HMRC page, reported it as period (or Tax month number) 7:
Long story short, this isn't valid reporting to HMRC. They're not interested when the actual work was done by the employee, but when the payment was made. As I was making a payment on the 9th November, this was a period 8 report... and HMRC accepted it as that: period 8.
I think the Payrun for [employee name] page should only accept valid Payment dates, being from the 6th of the month to the 5th of the next (I think, to be checked!). If the Payment date is outside of this window, I think Payroll should advise the user that the employee's pay needs to be incorporated into the appropriate month (or the payment date changed).
Warn When Sending a Duplicate HMRC Submission
Following on from my example above (with HMRC accepting what I thought was an October, or period 7, submission as period 8), it turns out that duplicate submissions for the same employee and the same period override the previous submission. As such, the submission for my real November pay on the 23rd November (also period 8) would have overridden the late submission for October. Not good!
While the above example would have been avoided through not accepting an invalid Payment date, this situation could occur when making changes after sending to HMRC - and indeed was part of the fix that ClearBooks telephone support guided me through. I think Payroll should provide an appropriate warning message, perhaps by again utilising the 'Click Send again' type of message, prior to sending duplicate submissions for an employee/period to HMRC.
I hope all of that makes sense! I'm sure there are further complexities that I've not thought about, but hopefully some warnings will help other users understand what they're about to do, and avoid HMRC penalties! No one likes those...