PAYE overpayment

[Louise]

Hi - we made an overpayment to the IR for PAYE and they sent us a cheque. How do I post this on Sage.

[brucedenney]

The overpayment would have been posted to the PAYE/NI control account so you should see a balance left on there, if you post the refund against that account it should bring it back to zero.

If the overpayment was not just a simple overpayment , but an error in your payroll calculation, then you also need to fix the payroll journals. Probably best to do that first as it should leave the right balance to be cleared on the control account.

[Louise]

The thing is we dont do the payroll here, its done by another company and they send me the P35 through and I just post the salaries and post the bank payment my director makes to the IR. So is it going to be a mistake at payroll level or do I need to start worrying?

[brucedenney]

If you are not doing any payroll journals, then I guess you have an expense account for payments to the revenue so post the receipt against that account

[Louise]

No, I do journals but what im saying is I just post what they send me.
I post the salaries BPs and then the journal (gross, PAYE, etc) to the various codes and then my director sends a cheque for the PAYE and I post that as a BP to the code 2210 and it clears the JC on that code. The thing is I have now posted the cheque we received back from the IR for an overpayment and the Nominal Code 2210 is now in credit. Is this normal?

[brucedenney]

Well you are tracking the whole thing properly.

But there should not be a credit balance on the control account so you need to resolve it

If you got a refund, the payroll must be able to tell you why and provide the information to correct the errors in the previous journals and bring the account back to zero.

I suspect that they have over represented tax in past payroll periods and this needs correcting, it could even relate back to prior years or might be something else.