We had a number of issues with employee duplication this April, but there are steps that can be taken that we would normally expect to prevent this.
What is Employee Duplication?
HMRC hold an individual record for each employee at their current employer. Duplication is when HMRC creates a second identical record for that employee at the same employer.
Why is it an issue?
Because at this point everything is still automated, HMRC will then assume that the employee is employed twice at the same company, and will issue tax codes such as BR or D0, removing an employee’s tax free allowance. You can also have 0T or seemingly random tax codes issued.
If the tax code changes are not spotted in time then employees may have a dramatically reduced net pay. This will cause problems in the workplace.
What is the solution?
Once the duplication has occurred then the best way to resolve it seems to be for the employees to call HMRC individually. HMRC may look for a better solution in the future but for now that is the best option.
If there are more than 50 BR or D0 tax codes issued then the Finance Director should promptly contact HMRC to trigger an investigation, HMRC should then be able to fix the error en masse. If there are less than 50 BR or D0 tax codes issued then the employee has to phone the HMRC helpline on their own behalf.
When does it occur?
The usual time is when there is a change in payroll software. It can occur at any time but it is usually triggered by a change in employee personal details or how they are reported to HMRC.
How can duplication be prevented?
This used to be fairly straightforward but there has been some unannounced changes in April that mean more employees will have been affected this tax year. There is an indicator in the FPS (Full Payment Submission) to say that the PayId is changing. The PayId is the unique number used for the employee in RTI (Real Time Information) submissions to HMRC, and is not necessarily the same as the employee reference number or works number.
HMRC have changed slightly how they deal with the PayId change indicator values in April. They suggest they are still using National Insurance numbers, names and addresses to try and prevent duplication but this appears to be very unreliable.
If you do change payroll software or provider you should always provide the previous PayId. The previous PayId must match exactly with what was previously submitted. If you do not have the previous PayId, or are unsure, it is still possible to indicate a new reference.
Unfortunately, even if the submission is perfect, it is still possible for errors to occur.