PAYE92066 - Reconcile individual: posting P14 to individual record: under-deductions

Where you have reason to review a customer record you may identify that their employer or pension payer has under-deducted tax. Alternatively the employer themselves may let you know.

Under-deductions of PAYE tax should be requested from the employer unless HMRC directs that the employee should pay. In all cases you should follow SPD 60 where the employer has under-deducted tax.

PAYE Credit

The PAYE Regulations at Regulation 185(5) confirm that an employee is due a PAYE credit for tax deducted or tax treated as deducted (where an error occurred) that should be restricted as necessary to prevent any repayment to the employee for that employment. This is because the employee has not paid the tax deduction.

You should create a Notional credit on the employee’s record when the following scenarios occur

• DMB PEU issue a Refusal Notice to the employer and there has been no appeal received within 30 days and no payment has been made by the employer
• A Regulation 80 determination is issued to the employer for the tax (PAYE54000)

Guidance on creating a notional credit on the PAYE Service can be found at PAYE93036.

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Direction issued

Where you receive a case back from DMB PEU and a Direction has been issued to the employee, this means that the tax is payable by the employee and no credit should be given or it should be removed if already given.

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