Payroll - EYU (Earlier Year Update), correction of errors
UK law requires that the figures for pay, tax, National Insurance and the employee details that are reported to HM Revenue & Customs (HMRC) on your Full Payment Submissions (FPS) are accurate. But sometimes mistakes can happen. If you have reported incorrect information on an FPS or Employer Payment Summary (EPS) it must corrected.
This guide will show you what you need to do to correct mistakes made in the previous PAYE tax year and when you might need to send an Earlier Year Update (EYU). Users of Liberty Accounts payroll will have access to EYU submissions for the 2016/17 payroll year once the final payroll of 2016/17 has been run and the year closed (although not necessary reported) and the Payroll rolled over to 2017/18
If you are unsure as to the necessary corrections we strongly recommend you take appropriate professional advice.
This guide addresses the following:
- Errors discovered before the 19th April following the end of the tax year
- FPS Errors discovered on or after the 20th April following the end of the tax year
- EPS Errors discovered on or after the 20th April following the end of the tax year
- Processing an EYU (Earlier Year Update) submission
- Entering the Updates Required
- Unreported Leaver
- Examples of Updates
- Example 1 Pay and Tax update
- Example 2 National Insurance category error
Errors discovered before the 19th April following the end of the tax year
If you discover, on or before 19 April following the end of the tax year, that you have not submitted an FPS or you have reported incorrect year to date figures, you should submit an additional FPS with corrected year to date figures or an EPS (Employer Payment Summary).
FPS Errors discovered on or after the 20th April following the end of the tax year
If you discover the issue on or after 20 April in the following tax year, you should submit an EYU. You can submit an EYU to correct FPS information for up to six years after you filed your original FPS. You can only use an EYU for the tax years where you operated PAYE in real time, not if you filed P35 and P14s. Note amended forms P35 and P14 can be filed online for up to six years after the original forms were filed.
EPS Errors discovered on or after the 20th April following the end of the tax year
If you have reported incorrect information on an EPS in a previous tax year, you must submit another EPS to report the correct total year to date figures for all recovered payments within that tax year. You can submit an EPS for up to six years after you filed your original EPS.
Processing an EYU (Earlier Year Update) submission
Note it is important to recognise that the EYU corrects the figures sent to HMRC, it does NOT adjust the accounting figures stored in Liberty Accounts because these were as a result of payrolls processed. The user may therefore need to make appropriate accounting adjustments depending on the updates made. It is recommended that appropriate professional advice is sort if you are unsure.
Once the current year has been closed the EYU facility will be available for amending that closed year. Navigate to Payroll RTI under the HMRC menu.
HMRC - Payroll(RTI) - EYU - click the + symbol and select EYU
A screen offering RTI filing options is displayed. By definition an EYU is for a prior year so select the year to which the EYU is associated from the PAYE Year dropdown and tick EYU. For example if the new current year is the 2018/19 the EYU is to apply to 2017/18.
Click ADD EYU to prepare an EYU.
A multi-tabbed screen is displayed to allow a user to enter the updates required.
Entering the Updates Required
EYU should only record the difference between what you had originally submitted on the final FPS and what the figure should be.
Submission Details Tab
Select Test Submission if required. Confirm or select the Sender Classification and select the Employee impacted by the EYU.
Payment Details Tab
Use this tab to amend payment and tax details.
NI #1, #2, #3, #4 Tabs
These tabs are used to correct national insurance errors. You may enter up to four category letters for one employee.
User Feedback Tab
Feedback from the System or HMRC on the process will be reported in this tab.
Submitting an EYU
When the necessary updates have been entered click SUBMIT to start the filing process. Note, if the user has previously filed FPSs, the necessary credentials will have already been entered, but if they need to be entered navigate to Government Gateway Credentials and enter them.
The usual RTI filing control screen is presented.
When ready click SEND to file the submission, dismissing the warning. If the local validation is OK the status is shown as Queued. For feedback on process click View and go to User Feedback tab. The user will receive an email detailing success or failure. In the latter case, correct the issues and re-send.
In the situation where a leaver has not been reported, firstly indicate that the employee should be processed as a leaver and enter the date. Do this by navigating to the particular employee in the manage employee list.
Payroll - Manage Employees - Payroll/Tax
You will need to know the PAYE tax code at the time they left. This may be obtained from the P11 report. The PAYE year 2016/17 will need to be closed for the EYU to be processed. Now navigate to the EYU screen.
HMRC - Payroll(RTI)
Change the PAYE year in the dropdown to 2016/17 and select the EYU button. Click the ADD EYU button. Now complete the EYU by selecting the employee and providing the Tax Code at the time of leaving. Note you need to provide the tax code because for most uses of the EYU the tax code held is likely to be different to that held on the system at the time of filing. The leaving date is picked up in background.
Examples of Updates
Example 1 - Pay and Tax update
For example, if you recorded £100 too little pay on an employees payroll record, the EYU should show '+£100'. You can only amend year to date data on an EYU. If you need to submit more than one EYU, each submission must only show the amount of the amendment from the last figures submitted. For example, if you submit a year to date figure of £10,000 for pay on your last FPS for the year, then realise that the figure should have been £12,000, you will submit an EYU to show '+£2,000'. If you subsequently realise that the actual figure should have been £11,500, you must then submit a second EYU which will show '-£500'.
Example 2 - National Insurance category error
An employee has been reported as subject to Table A NICs for the whole year but should have been subject to Table C. Using the P11 figures for that employee reverse the year to date figures as reported using negative amounts in NI #1 tab.
Then in the next tab enter figures, as they should have been.