Reduced PAYE Liability - How do I account for this!?

Just an update...

So I have got both the PAYE Liability and the Wage (Payment) accounts balancing and the Bank Account now shows the same as QuickBooks, but what I have done just doesn't sound right.

I have basically changed the transaction of the PAYE Liability to 0.00, set the Wage Expenses to 0.40 debit and the Payment is as it was at 0.40 credit.

Surely, I somehow need to record a minus of this 0.40 PAYE liability as otherwise there is no record of it as the previous payslip still shows a 0.40 extra liability.  It is effectively a minus liability (or credit).  But when I try to do this QuickBooks tells me something isn't right as the debits and credits are not balancing.  If I get them to balance then the PAYE Liability account still shows 0.40 out.

So yes, it all balances but would still appreciate if someone could tell me how a refund, if you like, of PAYE liability on the next payroll should be dealt with.

Thanks again

Andrew

Let's investigate where the PAYE 0.40 extra liability came from, pezza72.

We appreciate you for coming up with a workaround to balance both the PAYE Liability, the Wage (Payment) accounts, and the Bank Account. To trace where's the 0.40 PAYE liability amount, we can run the P32 report. The Employment Payment Record report shows the amount due to HMRC for a given tax month. Then, the report will show the sum of the weeks for the relevant tax month if you pay weekly. Here's how:

1. Go to view your reports in QuickBooks.
2. Under Employment Payment Record, click Run.
3. Choose the current year. The report opens in a PDF viewer, showing some of the following:

• Tax period and tax period dates
• Your net Income Tax (this is the sum of Income tax (PAYE) and student loan deductions made from your employees).
• Your gross and net NICs (the sum of your NICs from employee and employer contributions).
• Total deductions from NICs, which include any recoveries for SMP or SPP paid to employees. Also, if you are entitled to Small Employers' Relief, the additional 3% NIC compensation.
• Employment Allowance, if you are entitled to claim this.
• Amount Due to HMRC for the relevant tax month.

Once we trace the amount, we can enter a journal entry with the PAYE liability account entered on one line. Then, the default debtors account (you may have this as 'accounts receivable) is on a separate line(s), with the respective employee entered in the 'name' field. You'll then be able to select the journal entry under 'outstanding transactions' on the receive payment screen of the invoices. We'd recommend consulting this with your bookkeeper or accountant first to ensure that this is recorded accurately. 

When running payroll, journal entries are created for each employee and the liabilities you must pay to HMRC. The journals created affect your liability balances. The account Payroll Liabilities in QuickBooks has several sub-accounts to this account including HMRC, Pension, and Other Deductions:

• HMRC account will have Income-tax, Employer National Insurance, Employee National Insurance, and Employee Deductions (from the employee’s gross wage)
• Pension account will have Employer and Employee Pension Deductions
• Other Deductions account will have other miscellaneous deductions

If you need further assistance with this, please reach out to our Customer Support Team. They can pull up your account in a secure environment and help you with the PAYE adjustment. They can also provide your details about processing a refund of PAYE liability on the next payroll should be dealt with. Here’s how to get in touch with them:

1. Go to the (?) Help icon in your QuickBooks Online (QBO) account.
2. Select the Search tab, and click Contact Us.
3. Enter a brief discussion of your concern and click Continue.
4. Select either Chat with us (if you prefer messaging) or Give us a call.

You may read through these additional resources about this topic.

• P32 Report in QuickBooks Online Advanced Payroll.
• QuickBooks Online Payroll Hub.
• View submitted FPS and EPS filings in QuickBooks Online Payroll.

I've always got your back should you need assistance when doing payroll tasks such as running payroll reports, payroll year-end, and tax updates. Drop your reply anytime and I'll get back to you. Take care always.

Thanks for the reply @RCV 

So this is the snippet of the P32 showing just the minus amount of PAYE following the final Wage and effectively reducing the total PAYE liability by 0.40

This is how I have the books at the moment, which as mentioned, is balancing.  I can't seem to get it back to how it was when the books balanced but showed the bank account out by the 0.40 (typical!) as was going to show that setup too.  Personally, (in my own head), this 0.40 should be on the usual opposite column in the JE against PAYE Liability to actually show as a negative liability, but whether I put a minus or I swap it between columns, it either will not let me bypass (as it doesn't balance the columns) or it accepts it but shows a 0.40 balance on the PAYE Liability overview in the COA.  And to me there is no wage expense.  It is just a refund (reduction) of PAYE liability with a payment I made back to the carer as she clearly paid 0.40 too much on the final payslip

So are you suggesting that I should have a Payment of 0.40 in the credit (as it is now), a 0.40 PAYE liability of in the credit as this was a reduction in liability from the last submission and then what you are saying is there should be some counter 0.40 in the debit recorded under another category?

Apologies if I have misunderstood, the debits, credits confuse me at the best of times, but with this kind of being the opposite of what would normally be a PAYE liability, that is confusing me more :)

Thanks

Andrew