payroll agency & incorrect tax deductions..

[charliebrownsmum]

Has anyone ever used a payroll agency and find that they have incorrectly deducted the tax & NI?
I have been using one for our nanny and have made all of the quarterly payments that the agency has told me to but now they have sent me a letter from IR saying i have underpaid her tax by £290. I have emailed the agency saying that i have paid all of the deductions that they have calculated so don't understand this but they haven't responded. I will follow up on Tuesday but wondered if this had happened to anyone else?

also they sent me a copy of the letter from IR and it was dated 29th April but I was only sent it by email on the 27th May and they have said if I don't pay immediately I will incur a penalty/ I don't have a spare £290 right now so can't pay it immediately! I think they should have sent the letter sooner to give me some time to find the money so I don't feel i should be liable for any penalty if one is issued. What do you guys think??

any advice would be appreciated. Thanks x

I would have thought that it would be quite unusual for there to be problems like this, though human error does happen. The payroll agency are your agent appointed by you, so as far as HMRC are concerned, I would suspect you are liable for the under payment and thus any subsequent fine if they are not paid on time.

The agency however I feel have not acted that well from what you are saying, though whilst a letter is dated a specific date, you don't know for sure when the agency would have received that letter.

Are their any circumstances that you can think of which may have caused this underpayment? For example, did you agree a Net wage with your nanny? Does your nanny have a student loan or any other deductions from source? Does your nanny have any other job/income thus may have a unusual tax code?

I feel that HMRC will need paying, so call them and see if they can arrange any payment schedule. Discuss with the agency with regard to compensation, though what may be available there may be down to the contract between you - do they have liability for wrong calculations?

Leaving the agency isn't probably an option as you need them involved to get it all sorted out, plus to generate end of year paperwork. End of financial year however you will be dumping them and switching to someone else (if you still have a nanny at that point) - can't imagine you would be happy to stick with them.

There have been problems with some payroll companies in the past, see who uses a nanny payroll service from 2008.

hi thanks for your response, i know i will have to pay the money as with IR there is no negotiation but i'm just a bit annoyed because i thought by paying someone to do this would avoid the complications.
We have agreed a gross wage with her, i know she has no student loans and can't think of anything else that may affect it.

Hope you are able to get it sorted out. Would be interested to hear if you manage to find out what has caused the underpayment, as the same mistake may be occurring on other peoples payroll runs as well.

I think you should first find out what has gone wrong - it could be that HMRC have misallocated one of your payments for instance. If this is the case, you might not need to pay anything. Go back and check all the payments you have made to HMRC (since April 2010) and call HMRC on Tuesday (a number will be on the letter) to check they have been applied correctly.

If that's not the problem, call the payroll agent and ask them to confirm what payments should have been made: this will highlight where the difference is.

Letters from HMRC are often sent out with dates that are some time ago.

... of course the payroll agent should be bending over backwards to help you get this sorted out, if all they did was forward the letter from HMRC then that is not very good service IMHO.

I know....they just sent an email saying we have had an underpayment notice, you need to pay it asap or else you may incur a penalty. they then list reasons such as ir misallocating a payment. no offer to help resolve it!
the thing is i pay quarterly and have checked and know i didn't miss any payments, i have the email confirmation that the payments were received. My payments match what the agency said i should have paid but ir are saying it should have been more so this is why i'm confused.
Well get onto it on Tues and will let you know!!

You need to check that the IR have not got this wrong - they do make some fairly spectacular mistakes.

I recently received a demand for an underpayment of over £20k for a company i prepare payroll for! . Turns out their computer had logged a cheque payment as being bounced when this was not the case. I can prove this cheque did not bounce and the IR are currently "looking into it".

The company has definitely no intention of paying over £20k for this!

By the way, payroll bureau should be sorting this out for you. That is what you pay them for.