September 2020

How to Avoid Costly Payroll Mistakes

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.

Running a payroll is quite a challenge. It’s easy to regard it as a simple task when in fact an awful lot can go wrong, causing cost and upset employees, not to mention fines from HMRC or the Pension Regulator.

The table below shows some of the errors we’ve inherited with new payrolls, nearly all of which you will need to be on the right side of when running your payroll, whoever does it.

Some tips if you run the payroll yourselves

• Keep up to date with new payroll and employment regulations

Otherwise expensive mistakes can be made. When this involves employees, considerable upset can be caused

• Be accurate

Avoid errors, gaps and mistakes. Don’t pay wrong amounts which can lead to all sorts of issues and complications

• Set it up correctly

This is clearly essential otherwise you’ll risk being wrong, possibly every month and it will catch up with you sooner or later

• Avoid penalties

Observe HMRC deadlines. Penalties from late filing or payroll errors can be surprisingly high. Late means an automatic fine from HMRC which is very difficult to dispute. You need to know exactly what to do and always achieve it

• Maintain good records

You should record everything clearly and keep all the information for the current tax year plus the preceding three. This includes starting and leaving dates, maternity dates, benefits, time and rates of pay

• Check matters affecting the payroll

This includes benefits and student loans which may change tax codes. If not handled correctly there may be costly amendments required, possibly upsetting employees and landing your business with a tax bill

• Avoid paying a contractor when really they are an employee

This can be a tricky area. If you employ freelancers or contractors you need to be conversant with the difficult to understand rules. When might they be regarded by HMRC as an employee and must therefore be on the payroll, subject to PAYE and NIC? HMRC can go back years in claiming unpaid taxes

• Be careful handling childcare vouchers

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 NI savings and employees will be overtaxed

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

All Offsite?

This is an update to our blog in April “On or Offsite?”

Before the virus, 15% of our clients were onsite, interestingly non on Xero. Clearly we had to change to 100% offsite and this was achieved relatively easily, to the surprise of most. This was partly because we are very experienced with the technologies and also because the client recognised that the move was unavoidable.

Some of the our of work changed but not significantly. For instance, our clients needed to send us information which previously would have been in their office, not difficult. For some Sage users we started to host their system, for others we arranged remote access. Of course a benefit of Xero is that nothing needed changing because it was already 100% cloud, as are all the add-ons. Thank goodness that broadband capacity never appeared to be a problem.

Rather like our Canary Wharf client (see April blog) which was obliged to engage us 100% offsite (it worked out perfectly) the virus has had the same effect. We’ve certainly experienced what has been reported nationally in that the change has been remarkably smooth and in plenty of cases has actually improved matters. Our staff are more flexible in when they work and it’s easier to build a team when geography is irrelevant. 

So what’s happening as the lockdown is relaxed?

Interesting some of our staff have said they would like at least a partial return to onsite as it suits them personally, which is fair enough. Then some clients have said they would like us back. We have one client where we have returned fully onsite one day a week in Manchester – the nature of the work made it a bit of a pain offsite but this is the exception, the majority of the 15% are still totally offsite.

Effect on winning clients

Before the virus it would have been standard practice for us to visit a prospective client before engagement. Not any more. Now it’s handled by Zoom or similar and we are not physically visiting anyone, although we offer to do so and would be happy to oblige. Funnily enough we have record business in all our 26 years so something is working.

Effect on the labour market

Working from home has reshaped opinions and options. Less travel time, hassle and cost are attractive considerations. Commuting to London or major towns has suddenly become a lot less attractive. Being able to choose where to work from and when are now much more important considerations – this will have a massive effect on the labour market. 

Now it’s been clearly shown that secure work can be handled perfectly well offsite, the rules are changing. Employees are in a strong position to change, almost dictate, where and when the work is performed. This will affect the whole recruitment and retention process. 

Employers too stand to benefit from casting the net much wider for skills and will be looking to reduce office charges - a desk space in central London on average costs £10,000 p.a.. There is no going back on this which is a great breakthrough, possible a mini revolution. Of course BookCheck has been leading the way for 26 years :)

This entry was posted in Accounting, Business Development, Payroll by Caroline