PAYE92066 - taxpayer end of year: posting P14 to taxpayer record: under-deductions - action required in service teams (Action Guide)
When a case has been identified as having an under-deduction
of tax an experienced Officer must carry out a review. When
reviewing these cases follow steps 1 - 10 below. The guide is
presented as follows
For details of how to access any of the COP functions use the
[Index Of Functions] button on the left of the screen.
Open Employer Compliance review
- By looking at the ‘Employer Details’ screen in ECS is there an open Employer Compliance review?
- Yes - Go to step 2
- No - Go to step 3
- Where there is an open Employer Compliance review
- Refer the case to the local RISK Team to include as part of the Employer Compliance Review
- Do not give the credit for the tax due from the employer at this stage
- Use ENOTE ‘EC Review’ available from SEES notes paster or an SA NOTE of the EC review and the amount of tax involved. (EC staff will let you know when the review is complete and the amount of tax that relates to each employee)
- BF for 2 months
- If a satisfactory reply is not received within 2 months or final advice is likely to be delayed beyond 3 months the manager should look to see if anything can be done to resolve things
No open Employer Compliance review
- Where there is no open Employer Compliance review
- Write to the employer using the draft letter asking for payment, an explanation of why the underpayment has arisen and, where more than one employee is involved, include a breakdown of the total under-deduction showing
- Employee’s name
- Employee’s NINO
- Gross pay this employment
- P14 tax code (available on the work case screen in eOpen List)
- Tax code last issued according to the COP record, and
- Amount under-deducted by the employer
Note: When you write to the employer, check whether there are any other open points from either the Service or Compliance teams within the Area, if there are you should write to the employer only once and cover all issues.
- Does the P14 submitted indicate that the underpayment has arisen because the incorrect code was operated?
- Yes - Amend the code immediately, rather than wait for enquiries with the employer to be completed and then go to step 5. (It is likely that the code will have to be issued on a week 1 basis)
- No - Go to step 5
- BF the case for 6 weeks
- If the employer responds with a cheque for the full amount of the under- deduction, go to step 6
- If the employer pays some but not all of the under-deductions go to step 8
Action to take on response to BF - employer pays full amount
- When the employer responds with a cheque for the full amount of the under- deduction
- Deal with the cheque according to the existing guidance in your office
- Advise the Employer section that a pro-forma amended P35 / P14 is required for the year
- Make the relevant changes to the tax details for all employees (including SA taxpayers) in COP Function CS
- Use ENOTE ‘Under-deduction - Full amount paid by e’er’ available from SEES notes paster for all taxpayers involved to show that the employer has paid over further PAYE and to note the amount of credit
- Refer the employer’s explanation to the RISK team if the under-deduction was not inadvertent and penalties for an incorrect return may be appropriate
- For PAYE taxpayers review the liability in each case
- Where the under-deduction was the sole reason for the case being open, the year can be cleared Z in COP Function CS
- Where there are other reasons for the case being open, the year should be reviewed in the normal way by following the guidance at PAYE93000 onwards
Action to take on response to BF - employer declines to pay all or some under- deductions
- Where the employer declines to pay all or some of the under-deductions and indicates that a direction is being sought
- Identify the employees to whom any payment relates, if this information is not provided you will need to contact the employer
- Deal with the cheque according to the instructions for your office
- Advise the Employer section that a pro-forma amended P35 / P14 is required for the year
- Make the relevant changes to the tax details for all employees in COP Function CS, including SA taxpayers
- Use ENOTE ‘Under-deduction - e’er does not pay full amount’ available from SEES notes paster for all taxpayers involved to show that the employer has paid over further PAYE
- Refer all other employees to the PAYE Errors Unit (PEU) in Shipley using form P400 where it will suffice or under cover of a note summarising the main facts. Attach any correspondence
- For PAYE taxpayers review the liability in each case
- Where the under-deduction was the sole reason for the case being open, the year can be cleared Z in COP Function CS
- Where there are other reasons for the case being open, the year should be reviewed in the normal way by following the guidance at PAYE93000 onwards
Action to take where there is no response from the employer
- Where there is no response from the employer within 6 weeks
- Refer the case using form P400 to the Debt Management office for them to pursue the outstanding PAYE liability, and
- Credit the taxpayer with the PAYE tax that ought to have been deducted. Unless there are other matters to be addressed the open case may then be closed in the usual way. But note that because the taxpayer has not suffered the tax under-deducted the PAYE credit should be restricted as necessary to prevent any repayment arising as a result of that credit. Regulation 185(5) refers
- Use ENOTE ‘Under-deduction - no response’ available from SEES notes paster or SA NOTE to show the action taken, the amount of credit and the date the case was referred to the Debt Management office
