HM Revenue & Customs' (HMRC) IT system is not the reason for discrepancies in calculating charges, the organisation claimed, they are due to a transition to real-time information (RTI) reporting for employers and payroll service providers.
In a Pay As You Earn report, HMRC said that there have been some problems associated with the transition to RTI including duplicate employment details and delays in handing over forms, which have resulted in overstated or understated charges respectively.
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The key causes for the discrepancies were: miscellaneous employee errors, employer payment summary (EPS) returns, payment to leavers, timing of updates to HMRC's business tax dashboard, and issues relating to returns for constriction industry schemes.
HMRC said that it investigated a number of potential issues of its IT system in calculating the PAYE charge incorrectly.
When it analysed payments after leaving employment, it found that its systems were calculating the charge correctly. However, how an employer or an employer's software handles the final payment on leaving and after leaving can cause incorrect charges.
For example, an unnamed software provider's product continues to submit full payment submissions (FPSs) after the employee has left, which causes duplicate employments and in turn an overstated charge. HMRC said it is working with the provider concerned to correct this issue.
Another problem with payments after leaving employment is of employers who confuse the "payment after leaving" checkbox with a normal final salary payment, which has caused discrepancies.
A further HMRC IT issue that was investigated was the conversion of negative amounts in a submission (for example the net tax refund) to a positive.
"One discrepancy was exactly twice the sum of refunds to two employees. Investigation showed that there was in fact a duplicate employment, and coincidentally the amount of tax duplicated was exactly that sum," the report reads.
Finally, the calculation of liability when student loans are involved was investigated and HMRC found no evidence that the IT systems processed anything incorrectly in relation to this.
HMRC added that 2013-14 is a year of transition, and that its employers and payroll service providers are still getting used to the new way of reporting.
"It is clear from the analysis that it would be helpful to increase knowledge of how the employer charge is created - both internally in HMRC and externally with our customers and their agents," the report reads.
HMRC said it would publish enhanced guidance on the matter shortly.
