The £16,000 Error: A UK Commission Audit Checklist

A commission audit checklist is not really a compliance exercise. It is a search for the errors your reps never told you about — because reps report underpayments within hours and overpayments almost never. That asymmetry is why most UK sales orgs believe their commission numbers are broadly right, and why most of them are wrong.

One of the Commit team was once paid £16,000 on a commission that should have been £1,600 — a single misplaced decimal. Neither the rep nor the company noticed for a week or two. It was eventually reported, sorted out, and forgotten. What stuck was the obvious inference: if a 10x error can sit unnoticed in a payroll run, how many 5% and 15% errors are sitting in yours right now, quietly unreported?

TL;DR

Run a commission audit at least quarterly, before payroll cut-off, and treat overpayments as the primary target rather than disputes. The ten highest-yield checks are an independent recalculation of a sample, an outlier test on payment size, tier and accelerator boundary tests, split arithmetic, a credit-note and clawback trace, a plan-version check, leaver and starter pro-rating, and a full reconciliation from CRM to payroll to Xero. When you do find an overpayment, Acas guidance says employers can usually reclaim it but must tell the worker and agree how, and section 14(1)(a) of the Employment Rights Act 1996 takes overpayment recovery outside the normal unlawful-deductions rules. Payroll corrections go through revised year-to-date figures on a Full Payment Submission, per HMRC's guidance on fixing payroll problems.

Why don't commission errors get reported?

Commission errors are not distributed evenly in terms of who notices them. A rep who expects £4,200 and receives £3,700 will check the calculation, find the gap, and email their manager the same day. A rep who expects £4,200 and receives £4,900 has several plausible explanations available — a late deal landed, an accelerator kicked in, someone finally fixed the split — and very little incentive to interrogate any of them.

That means the error data reaching RevOps is systematically biased. Your dispute log is a record of underpayments. Your overpayments are invisible, and they are the ones that leave the business permanently. Once an overpayment has been through PAYE, spent, and left the rep's account, recovering it is a conversation about trust as much as arithmetic — which is why so many finance teams quietly write off anything under a few hundred pounds.

The errors you hear about are the underpayments. The errors that cost you money are the ones nobody mentions.

The second reason errors go unreported is that reps who don't trust the numbers stop reading them. Rep-side shadow accounting looks like diligence, but in practice a rep tracking their own spreadsheet is checking their total against their model — not auditing the employer's calculation logic. They catch shortfalls in their own favour and ignore everything else.

What does an unnoticed error rate actually cost?

Work it through on a concrete team. Say 20 reps on a £45k base plus £30k variable, paid quarterly — £600k of annual commission spend across 80 individual payment events. Assume, illustratively, that 8% of those payments carry an error and the average net error is £750. That is roughly six wrong payments a year and £4,500 of drift, most of it in the employer's disfavour because the underpayments get corrected and the overpayments don't.

Now add one decimal-point event of the kind described above: £16,000 paid instead of £1,600, a £14,400 gross overpayment. On top of the cash, the employer has paid secondary Class 1 National Insurance on the inflated figure — 15% for the 2026 to 2027 tax year on earnings above the secondary threshold, per HMRC's rates and thresholds for employers — so about £2,160 of employer NICs riding on money that was never owed. Recoverable through a payroll correction, yes, but only if someone spots it.

One bad quarter of that kind costs more than a year of commission software. That is the real argument, and it has nothing to do with saving admin time.

What should a commission audit checklist cover?

The checks below are ordered by yield per minute spent. If you only have two hours before payroll cut-off, do the first four.

Error class	Detection test	Where it hides	Usual cause
Decimal / fat-finger	Outlier vs trailing average	A single high-value line	Manual entry into a rate or amount cell
Duplicate deal	Unique deal ID count vs CRM	Two reps, or two periods	Re-imported CSV, renamed opportunity
Split mismatch	Sum of split % per deal	Multi-rep deals	Verbal split agreed after close
Wrong basis (gross vs net)	Recompute from invoice	Whole cohort, small % each	Plan wording ambiguity
Unapplied clawback	Clawback ledger vs refunds	Cancelled or refunded deals	No trigger between finance and comp
Stale plan version	Signed agreement vs rate used	Reps who changed role	Mid-year plan change

The pattern worth noticing: the cheap-to-detect errors (columns one and two) are the large ones, and the expensive-to-detect errors are the small recurring ones. That is exactly the wrong way round for a manual process, and it is why sampling alone is not enough — you need the outlier test running on 100% of payments and the recalculation running on a sample. Our guide to commission reconciliation for finance teams covers the three-way tie-out in more depth.

What can you do when the audit finds an overpayment?

UK employers are in a reasonably strong legal position on overpaid wages, but the process matters more than the entitlement. Acas guidance on handling overpayments states that in most circumstances an employer has the right to claim the money back, should contact the worker as soon as they are aware of the mistake, and should agree how it will be repaid rather than simply deducting it (Acas, Handling overpayments).

The statutory hook is section 14(1)(a) of the Employment Rights Act 1996, which disapplies the section 13 protection against deductions where the purpose is reimbursing the employer for an overpayment of wages (Employment Rights Act 1996, s.14). That is not a licence to recover unilaterally: an employee who genuinely did not realise, reasonably relied on the money and spent it may have a change-of-position defence, and a deduction made without notice invites a grievance you will lose on process even if you win on substance. We go through the practicalities in recovering overpaid commission.

How do you correct the payroll side?

Fixing the cash is only half of it; the PAYE record has to move too. HMRC's guidance on fixing payroll problems says a mistake in an employee's pay or deductions is corrected by updating the year-to-date figures in your next regular Full Payment Submission, or by sending an additional FPS before the next one is due (GOV.UK, Fix problems with running payroll).

There is one restriction that catches people out on large commission corrections. Where too little National Insurance was deducted, HMRC's guidance states you cannot recover more in a month than the amount of NICs the employee owes in that month — so the employee never pays more than double their normal contribution — and deductions can only be made in the tax year of the mistake and the year after. A £14,400 commission overpayment discovered eighteen months later is not a simple reversal.

How often should you run a commission audit?

Cadence	Scope	Time cost	Catches
Every payroll run	Outlier test, split sums, three-way total tie-out	30–60 min	Decimal errors, duplicates, missing deals
Quarterly	Full checklist, 5-rep recalculation, clawback ledger	Half a day	Basis errors, stale plans, boundary logic
Annually	Plan-version reconciliation, P11D and payrolling review, prior-year corrections	1–2 days	Systematic errors, tax reporting gaps

The per-run checks are the ones that matter most, because they run before the money leaves. Anything caught after payment becomes a recovery conversation; anything caught before payment is just a correction. If your export to payroll and to Xero is manual, that is also the moment to fix the handoff — see Xero commission integration for how the export should behave.

In practice, the teams that never find errors are not the accurate ones. They are the ones with no independent recalculation step, where the spreadsheet that produces the number is also the only record of how the number was produced. An audit trail you can replay — inputs, plan version, calculation, approval, payment — is what turns "we think this is right" into "we can show why this is right".

Frequently Asked Questions

How often should a commission audit be run?

Run the light checks — outlier test, split arithmetic and a three-way total reconciliation between CRM, commission calculation and payroll — before every payroll run, and the full checklist quarterly. Catching an error before payment is a correction; catching it after payment is a recovery negotiation.

Can a UK employer reclaim commission it overpaid by mistake?

Usually yes. Acas guidance states that in most circumstances an employer has the right to claim back money it has overpaid, and section 14(1)(a) of the Employment Rights Act 1996 takes overpayment recovery outside the ordinary unlawful-deductions rules. The employer should tell the employee promptly and agree a repayment method rather than deducting without notice.

What is the most common cause of silent commission overpayments?

In UK sales teams running commission in spreadsheets, the recurring causes are splits that do not sum to 100%, duplicated deals from re-imported data, clawbacks that policy says should apply but were never triggered, and reps still being paid on a superseded plan version after a mid-year change.

How do you correct PAYE after finding a commission error?

HMRC's guidance on fixing payroll problems says you correct a pay or deduction mistake by updating the year-to-date figures in your next regular Full Payment Submission, or by sending an additional FPS beforehand. Where employee NICs were under-deducted, recovery in any single month is capped so the employee pays no more than double their normal contribution.

Should reps be shown the workings behind their commission?

Yes — deal-level statements are one of the cheapest error-detection tools available, because reps know which deals should be there and what their quota and rate are. They will rarely flag an overpayment, so pair rep visibility with an employer-side outlier test rather than relying on it alone.