PAYE27040 - employer records: maintain schemes: maintain TAS schemes

This subject is presented as follows

Taxed Award Schemes – General

Taxed Award Schemes – Responsibilities

Opening and closing a Taxed Award Scheme

Additional Contracts

Taxed Award Schemes – General

From 1 November 1984 providers of incentive awards have been able to enter into special accounting arrangements for the tax liability on non-cash awards made to their own or to other peoples employees. From the 6 April 2001 Class 1A NICs arises on the cost of all third party benefits and must be included together with any employee’s tax they meet where they have arranged or facilitated the provision. The tax accounted for is voluntary but the Class 1A NICs liability is a statutory liability.

Taxed Award Schemes are

• Statutory for third parties
• Based on a contract between HMRC and the provider of an incentive award scheme for payment of the tax liability on the grossed up value of non-cash awards

Taxed Award Schemes - Responsibilities

HMRC Incentive Award Unit

Any enquiries regarding Taxed Award Schemes or incentive awards should be referred to the HMRC Incentive Award Unit.

They have responsibility for

• Deciding whether a provider can enter into a Taxed Award Scheme
• Agreeing the value of non-cash awards
• Drawing up taxed award scheme contracts
• Getting the contracts signed
• Setting up and maintaining the Employer Business Service (EBS) employer records for taxed award schemes
• Issuing manual annual returns P35(TAS)
• Dealing with the completed return and forms from the provider
• Reviewing forms P440 when queries are received about forms P441 and P443 from other offices

The Scheme Provider

The provider of an award is required to

• Give each recipient of an award a form P443 certificate showing details of the award and tax paid under a higher rate scheme. A certificate need only be issued to an employee who gets an award under a basic rate scheme where the employee requests one
• Make returns of awards made on forms P35(TAS) and P440 at the end of the year
• Pay the total tax due to Banking Operations within 90 days of the end of the year in which the awards were made

Opening and closing a Taxed Award Scheme

Opening

The opening of a TAS scheme will arise after the first signature of the first contract has been received. You should note that only one scheme is required for each provider regardless of the number of contracts that are signed. Guidance on the action you need to take where you are required to set up a TAS Scheme is at PAYE20155.

Closing

The closing of a TAS scheme will arise where the all contracts have expired or the contract has been terminated. You should follow the guidance at PAYE27042.

Additional Contracts

Additional contracts that arise for the same employer do not require a new employer record to be set up. Where you are advised of an additional contract you should follow PAYE27043.