Skip to main content
BigAl42
BigAl42
April 16, 2020
Solved

Employer NI expense not being reduced by Employer Allowance in Advanced Payroll from P&L and balance sheet?

  • April 16, 2020
  • 3 replies
  • 0 views
We switched recently from PaySuite to "Advanced" payroll, but the latter has never applied the Employer Allowance to the Employer NI expenses in the accounts. However it HAS correctly included and applied the Employer Allowance to the P32 and HMRC submissions. The net result is that my P&L reflects the Employer NI expense without the Employer allowance, effectively increasing the Employer NI expense by a total of £3000, and adding a corresponding Employer NI liability to the balance sheet. I have spentr over 6 hours dealing with front line support who eventually acknowledged after many snapshots and screen shares that the NI expense and liability should have been reduced by the Employer Allowance. Under PaySuite, the monthly payroll journal entry would have the Employer NI expense reduced to £0 by a portion of our Employer Allowance, with the final reduction being the outstanding balance. The "senior" team have stated repeatedly that the Advanced Payroll monthly journal entry is correct as it matches the total of all Employer NI amounts for our employees (which it does), but there is no adjustment in the books for the Employer Allowance through either (a) the figures of the payroll journal entry or (b) a second journal entry. The result is an incorrect Employer NI expense in the P&L and an incorrect Employer NI liability in the balance sheet. My account with HMRC has verified that the Employer Allowance has been taken into consideration with QBO's submissions, and subsequently my balance owed is £0 - I have been working from the P32 figures. I have given up with QBO support as the "senior" team evidently fail to understand the problem insisting that everything is correct. But how can it be? If there is not an issue with Advanced payroll, then how is the Employer Allowance supposed to be reflected in the books? Are we supposed to correct the monthly payroll journal entries or introduce correcting journal entries to reduce the Employer NI expense and liability amounts by the Employer Allowance?
Best answer by BigAl42

I received an email this morning from a senior support specialist at QBO who finally acknowledged that that the Employment Allowance is not being handled correctly by "Advanced Payroll" and that it will eventually be implemented. His suggestion was to either modify the "Advanced Payroll"'s journal entry (as PaySuite did), or to add a second journal entry to correct the first.

 

Since the P32 report is correct, my preference is to modify and correct the"Advanced Payroll"'s journal entry so the total NI & PAYE liability in the journal matches the total due in the P32's "Total Due" for that month and matches the PAYE+NI payment to HMRC.  To do this:

  1. Through "Employees" -> "Reports", under "HMRC Reporting" select  "P32 Report" and the payroll year.
  2. Within the P32 report, note the figure under "Emp Allowance" for the payroll month.
    If you are claiming Employers Allowance, it will be a negative figure and should either match the Employer NI, or reduce it such that the total reductions for this and the previous months totals £4000 (for FY 2020-21).
  3. For good measure, also note the figure under "Total Due" for that month.
    You should be doing this or something similar anyway to note what you have to pay HMRC for that month.
  4. Locate the ad open the journal entry for that month's payroll.
    I use the "Advanced Search" option at the bottom of the search box, search for "Journal Entries" where "Account" equals or contains "Payroll Clearing". You should get a list of the monthly payroll journal entries. Select the journal entry for the month in question.
  5. Deduct the figure noted in step (2) from both the "Employer National Insurance Expense" and "National Insurance Liability" journal entries (lines 6 and 7 for me).
    The total of all the NI and PAYE Liability figures should match the figure obtained in step 3 (and subsequently paid to HMRC). This is a useful cross-check.
  6. As "Advanced Payroll" does not currently set a useful journal number, for good measure alter the journal number to something like that used by PaySuite.  e.g. 2019-M12 (i.e. YYYY-MM)
    This will make it easier to identify.
  7. Save the journal entry changes.

Hope this helps.

3 replies

C
ChristieAnn 11
April 16, 2020

Hi there, BigAl42.

 

Yes, you can introduce correcting journal entries to reduce the Employer NI expense and liability amounts by the Employer Allowance. Before doing a journal entry, I suggest consulting an accountant to assist you in posting the correct account.

 

Here's how to create a journal entry:

 

  1. Click the Plus icon at the left panel.
  2. Select Journal Entry.
  3. Choose a journal date.
  4. Fill out the fields to create your journal entry.
  5. Hit Save and new or Save and close.

 

Please check this article to see a table that contains how account balances are affected by debits and credits in QuickBooks Online: How accounts are affected by debits and credits.

 

Please know that you're always welcome to post if you have any other concerns. Wishing you and your business continued success.

BigAl42
BigAl42Author
April 16, 2020

That was exactly what I proposed, and I would use the same Employer NI Expense and National Insurance liability accounts as used in the Advanced payroll journal.

 

However, the issue I have is that why should we have to put through correcting journal entries to fix advanced payroll?  Advanced payroll should do the correct thing.  If the previous payroll package, paysuite, could do the right thing, why not "Advanced" payroll. 

 

It seems to me many of us have been forced to switch to a more and broken expensive package, most of whose features we are not going to use.  "Advanced" payroll have all the data available, after all the P32 and HMRC submissions are all correct, its just that it has overlooked the Employer Allowance in the books. 

 

Why are Intuit not fixing their problem and instead suggesting that we, your customers, fix your issue?

    F
    Faith no More
    April 20, 2020

    Hi i am having the exact same problem its a shambles i'm now considering moving away from quickbooks to a different supplier , paysuit was brilliant everything worked as it should took minutes to do my payroll since moving to advanced payroll i've spent many many hours trying to sort out there problems , i shouldnt have to go and do journals to sort out there errors i thought that was what we paid a subscription for ,i chose quickbooks because it looked easy to use as im not an accountant , might as well go to sage, i also have all my pension paymenyts sitting in banking waiting to be reviewed because dont know where to transfer them to as the pension payments dont go into other payroll deductions anymore and its not an option to sent the payments to where quickbooks have put them , its a bloody nightmare , sick to the back teeth of it 

      BigAl42
      BigAl42AuthorAnswer
      April 28, 2020

      I received an email this morning from a senior support specialist at QBO who finally acknowledged that that the Employment Allowance is not being handled correctly by "Advanced Payroll" and that it will eventually be implemented. His suggestion was to either modify the "Advanced Payroll"'s journal entry (as PaySuite did), or to add a second journal entry to correct the first.

       

      Since the P32 report is correct, my preference is to modify and correct the"Advanced Payroll"'s journal entry so the total NI & PAYE liability in the journal matches the total due in the P32's "Total Due" for that month and matches the PAYE+NI payment to HMRC.  To do this:

      1. Through "Employees" -> "Reports", under "HMRC Reporting" select  "P32 Report" and the payroll year.
      2. Within the P32 report, note the figure under "Emp Allowance" for the payroll month.
        If you are claiming Employers Allowance, it will be a negative figure and should either match the Employer NI, or reduce it such that the total reductions for this and the previous months totals £4000 (for FY 2020-21).
      3. For good measure, also note the figure under "Total Due" for that month.
        You should be doing this or something similar anyway to note what you have to pay HMRC for that month.
      4. Locate the ad open the journal entry for that month's payroll.
        I use the "Advanced Search" option at the bottom of the search box, search for "Journal Entries" where "Account" equals or contains "Payroll Clearing". You should get a list of the monthly payroll journal entries. Select the journal entry for the month in question.
      5. Deduct the figure noted in step (2) from both the "Employer National Insurance Expense" and "National Insurance Liability" journal entries (lines 6 and 7 for me).
        The total of all the NI and PAYE Liability figures should match the figure obtained in step 3 (and subsequently paid to HMRC). This is a useful cross-check.
      6. As "Advanced Payroll" does not currently set a useful journal number, for good measure alter the journal number to something like that used by PaySuite.  e.g. 2019-M12 (i.e. YYYY-MM)
        This will make it easier to identify.
      7. Save the journal entry changes.

      Hope this helps.

      G
      gorilla-q
      May 3, 2020

      Yes, this is what I had to do.

      But why should I? Paysuite could do it, so why am I paying more for a system that cannot cope with basic journals?

      Also, I was not advised by QB that this was an issue, and the Support person I contacted through the help system said there was no issue.

      I now have to contact all my clients who switched over to tell them their accounts could be wron.

      This is not acceptable

      BigAl42
      BigAl42Author
      May 4, 2020

      Unfortunately your experience with Intuit support appears to be almost exactly the same as mine. It is completely unacceptable.

       

      I logged over 8.5 hours just trying to get them to recognise that there was a problem, and after progressing through their front-line support their so-called "experts" arrogantly responded every time that the journals were correct, and that was the end of the conversation. Only I persisted until eventually one of their front line support staff understood the problem, but she in turn spent at least a week trying to get their "experts" to recognise the issue also. If that is the effort their own staff have to go through, I despair as a customer.

       

      It is evident that Intuit have purchased/partnered with a payroll system that do understand Employers Allowance, but Intuit's own staff don't. It is also evident that insufficient QA and testing was done integrating the two as this is an incredibly elementary oversight and regression in behavior. While I think Intuit at least now know there is an issue, they don't grasp the effect it will have on small business - overpayments to HMRC, cash flow, and likely hours and money spent to figure out what the problem is. Also the longer Intuit don't address the problem and provide a fix, the harder it will get for them to fix the issue and the worse it will get for us, their customers.

       

      My biggest issue though is intuit's attitude to the problem. They deny there is a problem despite the evidence, they fail to recognise the effect the problem will have on the 1000's of small businesses that claim EA, and they fail to action a fix.

       

      It's been three weeks since I first alerted Intuit to the problem, and two weeks since they finally admitted the issue. Intuit have the correct figures from the payroll software's P32, so how hard can it be to use these figures? I have been working on software for the last 38 years so I'll tell you - not very. A morning, day tops with the right person. This is two weeks ago.

       

      I have progressed the problem up to a line manager and asked them to escalate the issue further, including notifying those businesses affected and correcting the entries if not already done by those businesses themselves. Unfortunately I don't see this happening. Like you, I find myself having to notify others of the issue. Not my job nor responsibility, only I feel obliged as I was the one who recommended QBO to them in the first place.

       

      Lastly, my advice to anyone reading this far is to correct Intuit's journals, rather than putting in a separate correcting journal entry. This way at least should Intuit ever attempt to correct their mistake, however unlikely that is, Intuit have a chance to identify that the problem has already been fixed. Otherwise you may find that if Intuit do correct their mistake, you may have to remove/reverse your correcting journal entry.

        E
        Elena N
        March 18, 2021

        Please note this issue has been fixed. If you are still experiencing the behaviour, please contact our support team. 

        Terms & ConditionsAccessibility statement