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

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.

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?

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 

Having spoken now to three different accountants, all of which have recommended Xero above QBO, we are now starting a trial with Xero. Like you, I am fed up with bank feeds being broken at least 1x per week, having to do journals to fix QBO issues, and every time I call their support having to go through the pointless exercise of clearing caches, cookes, switching browsers, using incognito mode, etc before you get someone with a clue. Even then that's no guarantee.

QBO started off well for us but has slid downhill rapidly over the last 6 months. I had not noticed until just now that on Trustpilot, 58% of QBO users rate it Bad, while 66% of users rate Xero great or above. For us, its only £2 more expensive per month (£30pcm for Premium and £5pcm for 5 employee payroll), so will be well worth it.

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

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.

It seems to me hat QB have forgotten that a lot of the there subscribers are not accountants or professional Book Keepers and the thought of interfering with a journal produced by Advanced Payroll is quite daunting ....  was petrified that I would screw it up and end up in a bigger mess but after another phone call which turned out to be a waste of time and energy was told there is nothing wrong with the program and I need to correct the journal myself :pouting_face::pouting_face::pouting_face::pouting_face::pouting_face: , I left them some nice feedback telling them how disappointed I was and how perthetic there software is .... I decided I needed to tidy my accounts up so grabbed the bull by the horns went to the chart of accounts in the Advanced payroll section and proceeded to change the destinations for tax and NI and pensions to the same place as they went to in paysuit so now the journals Advanced payroll produce now resemble the ones produced by paysuit I then correct the employer NI for that week , I've now gone back and amended all the journals from when I transferred to payroll and at last everything balances and I have somewhere to transfere my pension payments in banking  too,  I'm fortunate as I don't pay employer NI so I just change that figure to zero but it's very poor that we are expected to rectify a program shortfall I just hope if they put it right that I don't have to go through changing everything again , fingers crossed I haven't caused myself anymore problems but I think I'm past caring now ...

Yes, there is that naming issue also, and you don't have an option to use your existing accounts.  As we started a new tax year, for the April payrun I just gave up on that issue and switched to the new accounts "Advanced Payroll" is forcing us to use.

I had an even weirder issue in that in my second payrun "Advanced Payroll" created a "Payments" account instead of using the "Payroll Clearing" it created on the first, and we could not set advanced payroll to use the new account it created.  After going through the usual deactivate and reactivate the account, the problem was eventually identified under imports where "payroll clearing" had somehow been deactivated in a hidden manner.

A word of warning though.  Make sure your NI figures match the P32 reported to HMRC else you may fall foul of them.

The advanced payroll integration into QBO is really a half-baked solution and Intuit don't give a toss about the issues they have caused. Whomever is responsible for this needs to be given their P45 :)

Sorry for the long post, I found this thread whilst endlessly searching for help for QBO with advanced payroll, like many other users I’m far from a pro bookkeeper or accountant and just need some actual help, real topics that don’t post the same useless links to the advanced payroll hub.

After migrating from desktop which was relatively painless, the advanced payroll initially seemed  quite easy, until I ran the first payroll and got an error saying that it couldn’t post the journals to QBO, after hours of googling and searching the help topics, I found vague information scattered through different threads, with no clear instructions or walk throughs on what to do, did I need to create the suggested default accounts? if so, why didn’t it just do that for me or warn me and then do it!!! Most of the QB help team seem to post things like “speak to an accountant”, “we’re not accountants” or “here’s a helpful link”, it’s so frustrating been directed to another dead end post that isn’t helpful and marked as solved, something you don’t have permission to view or the topic in another country.

Is there a reason for this? Do you get recognition and points for posting a link? helpful or not!! I just don’t get it, clearly the QB help team don’t or haven’t followed the links they suggest because nearly all of them are irrelevant!

After getting the posting error I checked the chart of accounts, the default accounts had red crosses against everything saying no accounts found, after 2 days of worrying I was going to break something or make a complete mess that I couldn’t undo, opening payroll chart of accounts, looking, selecting, cancelling, looking at the import accounts again, I was totally confused with the whole thing, no help and disappointed it didn’t just work. I eventually plucked up the courage, crossed my fingers, hoped for the best and used the import. I selected my existing accounts payroll liabilities, payroll expenses and my bank account that wages are paid from and saved, then changed all the account defaults to the imported accounts. Payroll now posts the accounts to QBO and matches wages ok from bank transactions, I am struggling to match Nest pension payments without creating an expense and detailing the stuff myself, but I’m not sure if that’s through my own doing!

I still can’t help thinking I should have maybe created the suggested default account’s for my own clarity but even if I wanted to change it now, I can’t find anywhere a list of what the default accounts are supposed to be.

I understand that all businesses are not the same and have different ways of doing things, but the so-called QuickBooks Online Advanced Payroll Hub needs more Getting Started topics. It also needs some clear step through instructions with different examples, for us that are not quite as confident and worried about making changes that will take hours to rectify.

Thanks for your posts BigA142, it’s definitely help me and highlighted yet another little job to sort!

When they announced that payroll for desktop was stopping, I thought it would make it easy by staying with QuickBooks, how wrong you can be! moving to QBO also hasn’t save me the hours that it says it’s going to on the advert! I really don’t know how I would have found the time to sort this if it wasn’t for the present situation. ☹

I appreciate you sharing detailed information about your concern, @bob young. Please know that helping you is our top priority. 

I can see how helpful links or articles can improve your practices in recording payroll in QuickBooks. And I want to let you know that I'm taking note of your feedback about the article for Advanced Payroll Hub and send it to our product team for updates.

Also, the Payroll Clearing account will be the default account when running your payroll. You can separate the wages using our accounts or your own custom accounts. However, if you need any assistance with this, I'd suggest speaking with your accountant for more guidance.

If you need further assistance when processing payroll, you can reach out to our Payroll Support Team. This way, they can look into your payroll account in a secure environment and guide you through the steps of running your payroll.

Just in case you want to run your final payrun, feel free to check out this article for more details: Running final payroll 2019/2020 in QuickBooks Online Advanced Payroll.

Please keep in touch if there's anything else I can do to help you succeed with QuickBooks. I've got your back. Have a great day and keep safe.

Hi @bob young.   Thanks, I'm glad you found the post helpful. It was born out of frustration as Intuit's support were mostly useless, and when you got past them to their experts, they were arrogant and just as useless. I figured I could not be the only one going through this so posted, also in the hope the Intuit would finally acknowledge they have an issue if enough people like you responded.  Why we have to go through this route is beyond me.

Also, I am convinced that Intuit support get credit for replying or answering questions here, regardless of its contents. The result is you get useless links and incorrect answers, illustrating the lack of knowledge of their own product, with the continual cop-out "refer to your accountant".

Regarding the default accounts, when Intuit converted my accounts, these were already created.  I made the foolish mistake believing that when moving me over, Intuit would keep with the existing accounts. Instead, after running my first advanced payroll I discovered a parallel new set of accounts.  While I could manually correct the journals, it also took me days to figure out how to switch the default chart-of-account for the payroll journal to the pre-existing accounts. 

And since you asked, this image below is a screenshot I shared with the default settings QBO set me up to after the conversion. Note: These are the default accounts set by Intuit, not mine. They did not match the pre-existing accounts used by my previous payroll.

As I mentioned, most of these new accounts are parallel to pre-existing accounts from my old payroll, so I would have to switch these in the default chart-of-account settings for payroll (i.e. Employees -> Payroll Settings -> Chart Of Accounts -> Default Accounts) to point to the pre-existing accounts for the same expense/liability. It took me a while fiddling around to get the originals to appear in the drop-down selection. Support were useless and I gave up with them in the end. Like you, these accounts only appeared after I had imported them (Employees -> Payroll Settings -> Chart Of Accounts -> Import Acccounts) by activating them in the Import column.

Cheers

Thank you @Mark_R for illustrating the typical response I have found from Intuit employees to these discussions.  You have nailed it!

Thanks to you guys for doing the heavy lifting on this problem. Saved me hours I am sure. Like you, I have spent hours enough already trying to sort out other issues. Not good Intuit!

Just when I thought I was home and dry using your 'solution', I decided to check my HMRC account and surprise, surprise, there was no reduction in Employer NI contribution to take account of the employer allowance. I spent two hours with QBO support who insisted the P32 was correct (I never said it wasn't). They didn't seem to be able to grasp the central issues;

1 The employment allowance (as shown on P32) is not posting to liability account. As stated by you all previously this is because the payroll journal is wrong and has to be manually amended currently.

2 Neither is the allowance taken into account on the FPS and, as far as I can see, on the EPS either. 

They suggested that sending a blank EPS will invoke the Employment Allowance on my HMRC account. How that will happen with no mention of the allowance on the report remains to be seen but I will try it and let you know.

Hi Cidonline

If you go to Payroll Settings and from there HMRC Settings have you ticked the box that says you are claiming the employers allowance for 2020/21,doesn't do it automatically so this might be the problem 

Hi @Ciclone 

As @Faith no More said, you need to enable employment allowance for 2020/21.  That is not done automatically even if you were claiming the previous year, so you need to do it manually.  Intuit mentioned this in their year-end payroll video, assuming you stayed awake long enough.

Does your P32 reflect a deduction in the allowance in the "EMP ALLOWANCE" column for April, and if not is there an amount in the "EMPLOYER NI" column?  If both are 0, you are OK.  Also OK if the figure in "EMP ALLOWANCE" is the negative value of the "EMPLOYER NI" column (or -£4000, if "Employer NI" > £40000). It means your P32 is correct.

Otherwise, your 2020/21 EA has not been enabled and you need to enable it as @Faith no More  said. In addition, once enabled I would submit an empty EPS as Intuit said.  That is how HMRC get to know that you are claiming EA, and so won't come after you for "shortfalls" that don't exist.

Also, to help reassure you (as it did me), there is a way you can see exactly what is submitted to HMRC when you submit your EPS, even though Intuit don't provide this information in their reports:

1. Goto "Employees" -> "Reports" -> "RTI Submission Messages" (Under HMRC Reporting).
2. Enter in the date range where you submitted your EPS, and in the message type field select "EmployerPaymentSummaryRequest"
3. Select "Search" and scroll to the most recent transaction (if you submitted multiple times).
4. In the "Request" column you should see something like:
   

   {
     "EmployerPaymentSummary": {
       "EmpRefs": {
         "OfficeNo": "999",
         "PayeRef": "AA12345",
         "AORef": "111AA12345678"
       },
       "NoPaymentForPeriodSpecified": false,
       "NoPaymentDates": null,
       "PeriodOfInactivity": null,
       "EmpAllceInd": "yes",
       "EmpAllceIndSpecified": true,
   

5. If the fields highlighted in blue are as above, your empty EPS submission has activated your EA and you are good.

Lastly, if you have ended overpaying because EA was not taken into consideration, simply deduct last month's "Employer NI" amount from next's months payment to HMRC.  This is what HMRC advised us to do when my book-keeper made the same mistake using a previous payroll package (did not enable EA so as a result we had overpaid).

Hope this helps.

So, just to confirm as I have the same problem.  The employee allowance for 2020/2021 it was allocated on my P32 and submitted on the FPS but it has not been taken into account my HMRC gateway.  To activate this, I need to send a blank EPS? this will then activate it?

Yes. The FPS does not include information that you are claiming EA.  According to HMRC, you have to submit an EPS at least once within the payroll year to activate your EA with them, preferably at the beginning.  We had to do this with QB Desktops and PaySuite, and although there is nothing in "advanced payroll" that mentions this, I strongly suspect you will need to do it here also.

HMRC have been helpful on this with us and said not to worry if we submit EPS (or even FPS for a payroll period) multiple times, as its only the last submission that counts.  You should still get a confirmation email from HMRC on your registered account that you set up with "advanced payroll" when you submit an FPS or EPS.  So if you have not received such an email, you know that the FPS or EPS has not been submitted by "advanced payroll".

I found that although I had ticked all the boxes and submitted the FTS and EPS correctly, the SMP Recovery and Employers Allowance were shown on the P32 report but NOT included in the journal to QBO. So my accounts were incorrect and showed an excessive liability to HMRC. Having spotted this, I wasted over an hour online ‘chatting’ to a support person who consistently denied there was an issue with the system. I therefore advised him that I wished to lodge a formal complaint, whereupon I finally got access to an email address (and essential ref!).

Having raised the issue with them, I finally got this reply:-

“I totally understand where you are coming from. After checking this with our Senior Team, I got a confirmation that Advanced payroll is unable to record the employment allowance automatically on the payroll journal. I personally think that it should handle in journals but it's not by design at the moment.

I understand that this is inconvenient on your part and for now there's nothing we can do apart from sending a feedback to our Product Developers so they can add this functionality in the future.”

I am checking with them to see if this applies to all NI deductions – it certainly applied to our SMP recovery.

THIS IS A DANGEROUS DEFECT IN THE SYSTEM WHICH THEY HAVE NO INTENTION OF FIXING.

Please make sure this news is passed on as widely as possible, and if you think you are not getting these allowances - don't believe your accounts - check the journal to the P32 report and check both with HMRC online balances

@gorilla-q I argued one step further.  This is not a defect, its a regression. The old PaySuite software handled this correctly, while the "advanced payroll" does not.

That Intuit have no intention they will fix the problem is news to me though.  My last contact was with Andre Marques, a Line Manager at Intuit QuickBooks Online Support, who wrote "I will see that the engineers continue to work on the issue that you brought us, and I'll raisean alert regarding the information of such errors to customers. To be honest with you, I can't guarantee that it'll will happen sooner rather than later, but I'll most certainly do my best to have this go to someone that can improve such aspects.".

That was 2 weeks ago and I have not heard anything back since, so you may well be right.  I have not seen any evidence that Intuit are notifying customers, nor that any progress is being made in resolving this issue.  I'll ping them again.

Just wanted to add my tuppence worth to this. I have had exactly the same problem with the Employment Allowance not being recognised in the payroll journal. I have been SO frustrated at QB support telling me that this is working as intended, when it clearly is not. The 'senior' support bod I have been talking to seems to think there is nothing wrong with an ever growing HMRC liability.

The one slight ray of light is that when I raised the issue via the feedback button I got a response to say they are aware of this and are working on it.

@gorilla-q I queried QB Support and their response was as you suggested, this was an enhancement request which wont be resolved anytime soon. Naturally, this really peeved me so I followed up:

Hi Andre

 

On Wed, 2020-05-20 at 08:51 +0000, [email address removed] wrote:

Don't take the specific wording used to face value, because the journal entry system already exists, and so fixing it would be enhancing a feature we already have. Let me assure you we are doing our best to improve our product not only in the specific area that you mentioned but in other product areas as well.

 

I'm afraid you are incorrect. This is most certainly NOT an enhancement. It is a regression in behaviour and as such requires a bug fix. Previous payroll journal entries included the Employers Allowance deduction. Current payroll journal entries DO NOT.  Intuit HAD the feature where EA was accounted for. Intuit changed the payroll system, customers were not given an option, and in doing so caused a regression in behaviour where EA is NO LONGER accounted for.

 

By anybody's reasonable standards, removal of a feature is a regression. If you had tests and QA in place to ensure that any new features introduced DO NOT BREAK EXISTING FEATURES, then this would have been picked up. Hence my concerns regarding the poor quality of QuickBooks Online expressed in my previous emails.

 

If you were going to remove features, then customers should have been notified. We were not.

 

If the new design did not provide the same features as before, and customers were not notified, then this is a DESIGN FLAW. That is, A BUG.

 

I'm afraid I am not satisfied with your response nor that this issue is being seriously addressed. Please refer me to your manager or customer complaints.

 

This was his response:

Hello again Alex,

I see your point of view I really do, however, the most important part is working, which is the payroll itself and the EPS/FPS.
Regardless of the terms we use to describe it, it's still something we are doing our best to change.

There isn't much more information about it, you are speaking to the manager and you have expressed your dissatisfaction in multiple channels. This has been noted and is being addressed, now we must wait for an update on the product itself.
You already did your part, and very well, I may add, now we are doing ours.

Like I have said in previous emails to you, we are getting this feedback from customers about the new payroll system and we are sorry you weren't notified but these sorts of things happen to software and sometimes they fly a bit under the radar.

We appreciate your patience in this, but we must wait for an update.
Best regards

Andre Marques

So I guess we must wait for an update.

Just tried to reply to last posting but 'Unexpected Error' came up - censorship do you think?

Anyway I'll try again. My last reply from Intuit is as follows:-

"I've got an update from our Senior Team regarding your questions. So to confirm the defect also applies to SMP Recovery, NI deductions, recoveries or reliefs. 

This is currently working in Standard however, if you will migrate your payroll, you will have to start over again. For the mean time, you can manually adjust the payroll journal whilst waiting for the fix to be implemented in Advanced Payroll. We are taking your feedback seriously so hopefully this would be implemented soon. Once again, I sincerely apologise for the inconvenience this has caused you."

Absolutely stunning that the Standard (ie cheaper version) should work, but the 'Advanced' version doesn't!

Shows how much Intuit value the smaller businesses who are likely to be claiming this relief!