People Group Services Limited Company Number: 11570329

PAYE Reconciliation & HMRC Alignment Policy

1. Purpose

This policy establishes the framework by which People Group Services Ltd (“PGS”) ensures that all Pay As You Earn (PAYE), National Insurance Contributions (NIC), and statutory deductions are:

• Accurately calculated
• Correctly reported
• Fully reconciled with HMRC
• Supported by a complete and auditable record

The policy is designed to eliminate discrepancies, safeguard statutory funds, and protect all stakeholders from financial and regulatory risk, including Joint & Several Liability (JSL).

2. Scope

This policy applies to:

• All PAYE payroll operations undertaken by PGS
• All employees and contractors paid via PAYE
• All recruitment agencies, intermediaries, and MSPs engaging PGS
• All submissions made to HM Revenue & Customs under PAYE

3. Regulatory Framework

This policy operates in accordance with:

• PAYE Regulations
• HMRC Real Time Information requirements
• UK employment tax legislation
• Relevant audit and compliance standards

Including the Real Time Information (RTI) system governing payroll reporting.

4. Policy Statement

PGS operates a zero-variance reconciliation model.

At all times, the following must align exactly:

• Payroll gross-to-net calculations
• RTI submissions (Full Payment Submissions (FPS) and Employer Payment Summaries (EPS))
• HMRC account balances

No discrepancy, regardless of value, is acceptable.

Any variance is treated as a critical compliance exception and must be investigated and resolved immediately.

5. Reconciliation Framework

Payroll Calculation Validation

Each payroll cycle is subject to validation checks including:

• Tax code accuracy
• National Insurance thresholds and categories
• Pension contributions
• Statutory payments (SSP, SMP, SPP, etc.)
• Net pay outputs

RTI Submission Alignment

All RTI submissions must:

• Match payroll outputs exactly
• Be submitted within statutory deadlines
• Include accurate worker and payment data

Validation includes:

• FPS vs payroll report reconciliation
• EPS adjustments verification
• Timestamp and submission confirmation checks

HMRC Ledger Reconciliation

PGS reconciles:

• Total PAYE/NIC liability per payroll run
• Monthly cumulative liability
• HMRC digital account balances

Frequency:

• Weekly as a minimum
• Daily during high-volume processing periods
• Mandatory reconciliation prior to HMRC payment

Zero-Tolerance Variance Rule

• Permitted variance: £0.00
• No rounding tolerance
• No delayed adjustments
• No unresolved differences carried forward

6. Exception Management

Identification of Exceptions

Potential discrepancies may arise from:

• Incorrect tax code application
• Timing differences between payroll and HMRC processing
• Data input errors
• HMRC system anomalies

Escalation Procedure

All discrepancies must:

1. Be logged immediately in the reconciliation register
2. Be reviewed by the Compliance Team
3. Be escalated to senior management within 24 hours if unresolved

Resolution Actions

Resolution may include:

• Corrective RTI submissions
• Payroll recalculations
• Direct liaison with HMRC
• Stakeholder notification where appropriate

7. Controls and Governance

Segregation of Duties

• Payroll processing and reconciliation are performed independently
• No single individual controls end-to-end processing

Dual Approval Controls

• All reconciliations are subject to secondary review
• HMRC payments require dual authorisation

System Controls

• Automated validation within payroll systems
• Locked payroll periods post-submission
• Full audit trail of all amendments

Audit Trail Requirements

Each payroll cycle must retain:

• Payroll reports
• RTI submission confirmations
• HMRC reconciliation outputs
• Exception logs and resolutions

8. Reporting and Transparency

PGS provides stakeholders with:

• Agency-level reconciliation summaries
• MSP-level consolidated reporting
• Worker-level payslip traceability

Where applicable, access is provided via:

• Real-time reporting dashboards
• Period-end compliance reports
• Audit-ready documentation packs

9. Compliance Alignment

This policy aligns with best practice standards recognised by:

• Professional Passport
• APSCo

10. Breach of Policy

Failure to comply with this policy may result in:

• Internal disciplinary action
• Immediate suspension of payroll processing
• Escalation to regulatory authorities where required

PGS enforces a zero-tolerance approach to reconciliation failures.

11. Review and Continuous Improvement

This policy is:

• Reviewed annually at Board level
• Updated in response to legislative or HMRC changes
• Continuously improved based on audit findings and operational data

Declaration

This Policy is approved by the Board of Directors of: People Group Services Limited Company Number: 11570329

Last updated: 24th March 2026