PAYE72021 - PAYE operation: payments for PAYE purposes: doubts about whether payment counts for tax purposes (Action Guide)
Where the employer or employee has a genuine doubt and payment has not been made, follow steps 1 - 8 below. The guide is presented as follows
| Initial action | Steps 1 - 3 |
| If the employee objects | Step 4 |
| If the payment is later found to be taxable | Steps 5 - 8 |
For details of how to access any of the COP functions use the
[Index of Functions] button on the left of the screen.
Initial action
- Ask the employee to agree to tax being deducted
- Notify the employer that any overpayment will be repaid as soon as agreement is reached
Or
- Go to step 4 if the employee objects
If the employee objects
- Instruct the employer to either
- Exclude the disputed part of the payment from the gross pay calculation
- Or
- Use code NT where the whole of the payment is disputed
If the payment is later found to be taxable
- Use COP Function CD or TA to set the POTA signal on the
taxpayer record, and note the reason in COP ENOTES
- Tell the employer to deduct tax from the total payment in future
Or
- With the employees agreement issue a non cumulative code to the
employer to operate instead of code NT
- Ask the employer for a written statement of payments from which tax ought to have been deducted
