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HMRC internal manual

Collection of Student Loans Manual

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HM Revenue & Customs
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Compliance: employer compliance: employer compliance - walk through tests

The subject is presented as follows

Walk through tests

Employer Compliance caseworkers should undertake a walk through test of each system operated by the employer, see COG905090. This includes tests to ensure that student loan borrowers have been identified and the correct deductions have been made and returned.

Walk through templates are available on SEES on which to record the walk through tests. However, where you decide the use of the templates is not appropriate, you must ensure that the test is undertaken and the same level of detail is recorded.

In addition to the specific student loan walk through test, EC staff should also ensure that their payroll and remittance tests include a period where student loan deductions were made.

Payroll walk through

Where you have established that the employer has been authorised to make Student Loan deductions or you have identified deductions in the pay records they should select

  • At least one borrower to form part of the reconciliation check

And

  • If possible, this borrower should be one of the key employees

Note: Large Business Service Employer Compliance checks should include at least one borrower per location, where appropriate.

You should check that Student Loan deductions have been calculated and deducted correctly. In particular, ensure that the employer has

  • Deducted on a non-cumulative basis
  • Paid attention to the pay thresholds before making deductions

And

  • Calculated deductions on the gross pay liable to NIC and not the net, after Class 1 NICs have already been deducted

Remittance walk through

You should check that

  • The correct amount of Student Loan deductions have been paid to HMRC

And

  • Compare the remittance with the BROCS printout, cashbook and other records

Note: There is no separate section for Student Loans on the BROCS printout. They are included in the total for tax.

The results of this check should be recorded in the case papers.

P35 walk through

You should compare the total Student Loan deductions recorded on a sample of P11s with the total figure returned on the P14s. If the employer cannot provide copies of the P14s you should continue this check at the office.

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Scrutiny of cash / petty cash records

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