Resolving Salary Discrepancies: A Real-World Payroll Case Study

Introduction

Payroll management is not just about processing payments—it’s about ensuring every detail is precise to avoid costly tax issues. This case study illustrates how Corient helped a UK-based client tackle a complex salary allocation error with HMRC, safeguarding their reputation and ensuring compliance.

The Initial Problem: What Went Wrong?

A client discovered that the salaries of two employees were being merged under a single account in HMRC’s records. Despite submitting correct data, one employee’s higher salary was being added to another’s lower salary, causing inflated tax deductions and frequent tax code changes.

Upon investigation, the core issue was traced to a change in payroll reference numbers initiated in April 2023. This unnoticed adjustment caused HMRC’s system to misallocate salary data.

Corient’s First Solution: The Fix

Understanding the urgency, Corient identified the root of the problem: incorrect reference numbers.

Here’s the initial action plan:

• Checked the client’s submissions using HMRC’s payroll tools.
• Verified data accuracy on the client’s side.
• Contacted HMRC directly to report the issue.

However, HMRC couldn’t provide detailed insights without employee authorisation due to data protection rules.

The New Problem: A Surprise Roadblock

The unexpected obstacle was HMRC’s inability to provide full assistance without the official authorisation of an employee. This added a layer of complexity requiring careful coordination.

Corient’s Second Solution: Fixing the New Problem

Step 1: Obtaining Employee Authorisation

Corient arranged a virtual meeting with the affected employee, explained the issue, and secured formal authorisation to act on their behalf.

Step 2: Direct HMRC Engagement

With authorisation in place, Corient contacted HMRC’s helpline again, now able to access specific account details. The team discovered that the misallocation stemmed from changes to the reference numbers.

Step 3: Reprocessing Payroll Data

Corient used HMRC’s Basic PAYE Tools to:

• Reprocess Year-to-Date (YTD) salary figures for both employees.
• Submit corrected records separately to HMRC.

Step 4: Creating New Payroll Records

To prevent similar issues, both employees were marked as leavers in the system, and new records with correct reference numbers were created for the new financial year.

The Final Outcome: Success Story

Through persistence and methodical action, Corient corrected the salary misallocation. Both employees’ tax records were updated accurately, tax codes normalised, and overpaid amounts adjusted.

“From confusion and repeated tax issues to a complete resolution, Corient’s team handled everything with clarity and professionalism. We couldn’t have done it without them.”

Key Takeaways: Why This Matters for Businesses

• Payroll Errors Can Lead to Financial and Reputational Risks
• Proactive Record Management Prevents Complex HMRC Issues
• Employee Authorisation is Essential for Resolving Sensitive Matters
• Expert Support Ensures Compliance and Peace of Mind

Payroll precision protects both employee trust and business integrity.