Bookcheck | Transform your Profitability

Posted on April 7, 2020

Online working or Onsite?

Our work of book-keeping with management accounts plus a payroll bureau was about 85% online before Covid-19, now of course it’s 100%.

Gradually over the last 10 years our clients have moved towards an offsite service and nearly all new prospects want this. We’ve always delivered payroll this way – for 25 years. But now the remaining few have been forced to change. Perhaps surprisingly the transition has been pretty smooth - it helps a lot that we are very used to such a change. It clearly begs the question as to whether any of this should revert to onsite after this virus - time will tell.

Of course it’s not all positives - it does rely on the client to communicate efficiently. Most clients do but not all. There may be a bit of work assembling data to be sent to us but this is rapidly dwindling as more and more source data becomes electronic, such as purchase invoices. Documents now tend to be sent to software that routes the data automatically into Xero and the like. Such changes always improve efficiency and in some cases literally transform the business – it’s great to behold.

We abandoned going onsite to London years ago – the added costs and travel time were just ridiculous.

Canary Wharf – would you travel there for a new client?

We were all set to be appointed to a major new client with the first task being to sort out a huge reconciliation mess. We offered to do all this offsite as travelling to Canary Wharf was impractical for the staff we would have used. The prospective client declined our proposal and politely insisted that all the work had to be handled onsite and to a very demanding timetable.

The company needed an immediate start and wanted someone to work totally onsite full time for two weeks in Canary Wharf as it required working closely with their Finance Manager on a complex task. We questioned this as our 25 years experience told us that none of this work needed to be done that way. We therefore suggested that some initial work could be done onsite but other work could be completed remotely.

Instead the company decided to use an onsite contractor to handle this phase 1 with a view to appointing us ongoing in the phase 2. Half way through phase 1 the contractor left, without notice. The work had been left in a poor state and the need was even more urgent with an extremely tight timetable for completion looming. We picked up the baton to achieve the complete reconciliations. The extremely tight deadline was achieved after the BookCheck team had unpicked and resolved the errors that had been made.

•   Our staff (from 60 staff) were split into teams, allocated to different streams of the work in order to get up to speed quickly and within the completion deadline
•   We worked extremely long hours, including a full weekend and pulled together to complete phase 1, facing considerable time pressure to complete everything by an immovable deadline. This included a two year VAT reconciliation - transactions from Sage had to be manually ticked back to transactions migrated to Xero to ensure the first MTD VAT return was completed accurately and on time as it was. This work started on 2nd September for the VAT quarter that was due to be filed with HMRC by 7th September
•   FD and Financial Manager of the client provided schedules to show how things should be appearing in the accounts; BookCheck were tasked with making sure the accounts matched up
•   A lot of the work that the contractor had handled was unpicked and corrected.

The point is that All of this work was done offsite, without the BookCheck staff meeting anyone at the client. We acknowledge the full support from the client in assisting and communication with us – this was essential in achieving the objective.

It left us wondering why not use us in the first place? I suppose it’s a matter of trust - if you can see it you can control it? Obviously not.

So a silver lining from this virus will be a big push to much more working offsite for a whole range of jobs, after proving that in most cases it works well. Not before time in our opinion.

Costly Payroll Mistakes and How to Avoid Them

Posted on February 25, 2020

It’s often a struggle fitting in the payroll processing but clearly it’s important to avoid mistakes which can quickly lead to staff problems and significant fines.

Here are some of our experiences:

Examples of payroll and auto enrollment problems

	Specific inherited errors - Payroll	How we resolved

Client 1	Incorrect pay submissions to HMRC Pay components set up incorrectly Attachment of earnings incorrectly deducted	Corrected all issues and submitted revised info to HMRC
Client 2	Non-filing penalties, fines etc. (5 schemes)	Brought all PAYE schemes up to date and successfully appealed 16 penalties
Client 3	5 incorrect annual payrolls run for Director only businesses Incorrect treatment of CIS.	Reran and resubmitted Ensured robust reporting processes in place going forwards. Successfully appealed penalties.
Client 4	Claim of Employment Allowance had been wrong, the company was deemed to be in a group therefore should not have claimed	Ensured that HMRC was notified to remove the claim.

	Specific inherited errors - Auto enrolment	How we resolved
Client 5	NHS pension contributions were being incorrectly calculated	Historic analysis and re-calculation provided to client, outstanding contributions paid to pension provider
Client 6	Pension scheme had been set up incorrectly leading to under deduction of contributions across 2 tax years. Previously reported to the Pension Regulator as contributions had not been uploaded to the Pension provider	Reviewed, analysed and corrected all members and employer contributions
Client 7	Unable to add a payroll to TPR for re-declaration	Called the TPR, found that they submitted a Declaration of Compliance in June 16, then filed an exemption which is why the system didn’t allow a re Declaration. TPR needed to re-activate them.

Not specific but common errors	Consequences

Directors set up incorrectly as employees	NI incorrectly calculated
Wrong SMP information given	Wrong amounts paid, wrong ending dates etc.
Employment Allowance not claimed or wrongly claimed	Not claimed or incorrectly claimed
Not informing us of leavers in the current year	End of year figures then inconsistent with HMRC
Tax codes not uplifted for the current year	Wrong tax calculations
Pensions being calculated incorrectly re tax relief, e.g. pre-tax when it should be post tax or opposite	Double tax relief to employee, or no tax relief at all
Pensions being calculated on full salary when it should be on qualified earnings only	Wrong calculations for employees and employers

Some suggestions if you run the payroll yourselves

• Set it up correctly

An essential requirement otherwise you’ll risk always being wrong and it will catch up with you some day.

• Keep it accurate

This may sound obvious but we’ve seen many examples of slackness, errors, gaps and issues. It’s surprisingly common for the wrong amounts to be paid which can lead to all sorts of issues.

• Keep up with changes in payroll and employment laws

Otherwise costly mistakes can be made. When this affects employees, considerable annoyance or even upset can be caused.

• Avoid penalties

Keep to HMRC deadlines. Penalties from late filing or payroll errors can be high and nowadays there’s no scope for being late with payments to HMRC. You need to know precisely what you are required to do and stick to it, all the time.

• Keep track of employee matters affecting the payroll

Such as benefits or student loans which may change their tax code. If these are not dealt with properly there may be some costly amendments, possibly upsetting employees and facing your business with a tax bill.

• Avoid paying a contractor when they are really an employee

If you employ contractors or freelancers you need to understand the rules. When might they be regarded by HMRC as an employee and must then be on the payroll, subject to PAYE and NIC? Unfortunately, HMRC can go back years in claiming unpaid taxes.

• Keep good records

You should be disciplined in recording everything clearly and keep all the information for the current tax year plus the preceding three. Examples include starting and leaving dates, maternity dates, benefits, rates of pay, time.

• Handle childcare vouchers correctly

If these are through a salary sacrifice scheme then they need to be deducted from gross salary before tax. If not then you will be missing out on National Insurance savings and employees will be overtaxed.

This entry was posted in Payroll and tagged in Payroll by Caroline

On or Offsite?

Costly Payroll Mistakes and How to Avoid Them

Some suggestions if you run the payroll yourselves