Hash-coding PAYE with BACS

Protects against HMRC RTI Compliance Issues & Penalties


HMRC themselves anticipated RTI would have a few “chewy moments” as they described it.

It’s already clear that there are issues with how HMRC’s own systems are processing employer returns and reconciling this data with payments to employers’ PAYE accounts.

However, HMRC's requirement that payroll software uses hash coding for those making payments to employees by direct BACS, provides an alternative for recording and demonstrating their correct operation of PAYE.

Paying by BACS provides clear traceability of the amount of PAYE deducted and compliance with RTI reporting obligations, by reference to net pay and the hash codes generated for each employee payment. All of this is shown by BACS.

Paying PAYE due via BACS also allows employers to demonstrate they have settled their liability to HMRC, even showing the exact time the payment was made.