HM Revenue & Customs (HMRC) is issuing fresh warnings to employers to ensure their payment reference numbers are correct so that payments are recognised.
Each payment reference number relates to a specific employer and covers a particular accounting period.
HMRC uses these reference numbers to allocate payments and to help process taxes related to PAYE payments as quickly as possible.
The tax authority has said that the use of the incorrect PAYE reference number could result in it issuing penalties and charges even if an employer has paid on time.
To complicate matters further, online banking services may also default to a previous payment reference, creating additional confusion, so employers must check this is right every time a payment is made to HMRC.
How to check if the payment reference number is correct?
Businesses need to make sure that they use the correct Accounts Office reference, which can be found on:
- The letter HMRC sent when they first registered as an employer
- The front of their payment booklet
- The letter from HMRC that replaced the booklet
- Their Business Tax Account if they’ve already added Employer PAYE enrolment to it.
Where an employer is not paying for the current period, they need to add four additional characters to the end of the reference number that indicates the year and the month or quarter the payment is for.
Each tax period has a different payment reference number, so it’s important to make separate payments for each period.
Ensuring you use the correct reference can be complicated. HMRC wants to make sure that employers get this right and avoid penalties, which is why it is encouraging businesses to use its ‘Pay now’ tool on GOV.UK to find the right reference number to use each time.
If this is a further admin burden you don’t need when you are trying to run a business, get in touch with us today to find out how we can take payroll headaches off your plate.