PAYE93010 - Reconcile individual: end of year reconciliation: deciding if a case can be reconciled

Note: You cannot reconcile a year on NPS where the case concerned fits the SA criteria attached to work item 117 ‘Potential SA case’ (PAYE93058) and you will need to deal with the year through SA. Further details are given at PAYE93001 under heading ‘Interaction with Self Assessment’.

A year is considered to be ready for reconciliation when the number of forms P14 and P11D received on the PAYE Service equals the number expected and, where issued, all expected targeted review forms (for example P810) for the year have been received and captured.

To determine if a P11D is expected, the system will look at the current code and IABD to see if there are benefits included. This is to determine whether or not a P11D is expected / required as part of the reconciliation process only and where a P11D is required it will only be accepted as received for reconciliation purposes where it is received automatically from ECS (in which case Contact History will show a Form Type of ‘P11D’) or, it is captured manually into IABD as Form Type ‘P11D (MANUAL)’ (see PAYE130040 and PAYE93036).

When looking for forms P14 and deciding if the details for a customer can be used within reconciliation, the system will

• For JSA employments that have ceased before the end of the tax year, not receive a P14U and in lieu of the form the tax calculation for the year will include the P45 (1) U details in Employment Summary. However for 2008-09 and / or 2009-10 there may be instances where P45(1) details are not held and for these years only and only where it is known that a JSA employment claim ceased before the year end you should update the record as follows

• • Use the SEES ‘JSA Ready Reckoner’ calculator to estimate the amount concerned for each period of JSA in the year
  • Capture the details as forms P60 against the JSA ‘Employment(s)’

• Disregard employments that have been marked with ‘nil pay and tax’ for the year
• For forms P14 coded NT, have

• • Automatically included the P14 details in an end of year reconciliation where the form concerned was processed prior to April 2011
  • Disregarded the P14 details in an end of year reconciliation where code NT was operated correctly by the employer and the form concerned was processed during or after April 2011
  • Created work item 438 (PAYE93055) where code NT was not operated correctly by the employer and the form concerned was processed during or after April 2011

If the case cannot be reconciled because information for the year is outstanding, no action will be taken at this time.

If the case can be reconciled then a number of triggers take place.

Note: If there is a gap in employment not covered by a P14, you are no longer required to make enquiries into the employment gap, for example by issuing a form P92. You can assume the information shown on the PAYE Service is correct and you should proceed to reconcile the case. If exceptionally you receive a form P92 or information on any employment gaps, use the information provided see PAYE61196 or PAYE61053.

Where a P14U is not available for the end of year or a P45(1)U for claims that have ceased in-year

• Write to the customer asking them to send in form P60U or P45(1a) - if they do not hold them, they should obtain the details directly from Job Centre Plus to support a claim to repayment
• In cases where the customer is likely to be underpaid, do not attempt to try and reconcile early unless a request is made by the customer - the PAYE Service will automatically reconcile the year when all outstanding information is received or, it will output the case at a later date as a as work item for clerical review

For further information on JSA credits see PAYE67001.

At the point at which the system determines that all information is held to allow a given year to be reconciled, it will then look to see whether it should be reconciled as a single year or included within a multiple year reconciliation (PAYE96201).

Reconciliation triggers
Manual triggers
Automatic triggers
Re-reconciling

Reconciliation triggers

Reconciliation will be triggered either automatically or as a result of an action taken by you (manual).

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Manual triggers

You can trigger reconciliation from the ‘Reconciliation Summary’ screen, by

• Selecting the relevant tax year from the drop down menu next to the tax year field

• Selecting the Reconcile [Submit] button

Reconciliation can also be triggered manually by the input of information into IABD (PAYE130001) and / or when capturing P60 details (PAYE61186) onto a customers record.

Where you receive a P525 or P528, there will be no corresponding employment. In order for the P525 or P528 income to be included in the reconciliation you will need to create an employment, see PAYE61000, and then potentially cease it. You will then need to input the P525 or P528 pay and tax details as P60 details and trigger reconciliation.

If you try to reconcile a case and it cannot be reconciled you will receive an appropriate online message explaining why reconciliation cannot occur. Where the reason concerned is that all information required to allow the case to reconcile is not held, dependant upon the information outstanding, the message will be one of the following

• Reconciliation cannot occur, P14 details expected
• Reconciliation cannot occur, a P11D is expected
• The reconciliation cannot be completed as there is an outstanding P87
• The reconciliation cannot be completed as there is an outstanding P810

Note: The messages are received singularly and where more than one item of information is outstanding, for example both a P14 and a P11D, you will not receive the P11D outstanding message until the appropriate P14 has been received.

In the case of form P87 and / or P810, the forms are not considered to be received until they have been captured and appropriate entries from them have been recorded into IABD.

In the case of a P87 and / or P810 being outstanding, due to a system design issue, you will receive the appropriate form outstanding message for a case where you are trying to reconcile CY-1 and the form concerned is for an earlier year. You will be able to determine whether or not this is so by reviewing the information in the Review Status Summary screen. Where you do this and the form preventing CY-1 reconciling is for

• CY-1 and you are actively looking to reconcile the year; you should obtain the outstanding form before proceeding with the reconciliation
• CY-1 and you are not actively looking to reconcile the year, you should take no action to obtain the form - the year concerned will be reconciled at a later date
• An earlier year, you should proceed as follows (to clear the advisory message) before you proceed to try and reconcile CY-1 again

• • Capture receipt of the ‘outstanding’ P87 / P810 into IABD
  • Enter an amount of ‘0’ into the Tips amount field. Where tips actually apply to the case being reviewed you should enter ‘0’ in the next available unused field
  • Update Contact History with details of the action taken

Where an employment start date is towards the end of the tax year, the employer has an option to tell us on the P45(3) that they will not be sending a P14 for that year. This information is stored on the PAYE Service and the Service will not expect a P14 for that employment. Where a P46 has been submitted to create the employment, this information will not be held. Where the P14 outstanding message is received for an employment with a start date late in the year and you believe no P14 will be submitted you should record Nil Pay and Tax against that employment. The PAYE Service will then allow you to reconcile the year.

If you try to reconcile CY-1 and an earlier year remains open, CY-1 will not reconcile and you will receive the following online message

• Calculation cannot be processed as an earlier year needs to be reconciled

You will need to clear all earlier open years before CY-1 can be reconciled.

For cases where your review of the appropriate tax calculations associated with the reconciliation show that the case / year satisfies the SA criteria at SAM100050, you should

• Set the year up in SA
• Manually set the year on NPS to ‘Reconciled - SA’
• Update Contact History with details of the action taken

Re-reconciliation of the same tax year can be requested / required. This may be necessary due to

• Additional / new details being entered into IABD that result in a change to the customers tax liability for the year
• Deleting details from the customers record (for example a duplicated employment) that have previously been included in a reconciliation / tax calculation for the year

Where re-reconciliation of a year is required you can do so by either selecting the Reconcile [Submit] button on the ‘Reconciliation Summary’ screen or through the IABD screen PAYE130020.

Following on from the process to determine that a year can be reconciled, where the system determines that a

• Single year reconciliation only should take place, you will be taken to the appropriate Tax calculation screen (PAYE93037)
• Multiple year reconciliation (PAYE96201) should take place, you will be taken to the Multiple Years Reconciliation Summary screen (PAYE93016) from which you will be able to access the Tax Calculation screens for all years covered in the reconciliation

In both cases you are required to view the calculation(s) within the reconciliation to ensure that they are correct before you decide whether or not you proceed to authorise them to be issued.

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Automatic triggers

The main system trigger is the receipt of all the expected forms P14 and P11D as described above and once triggered validation checks (PAYE93020) take place, to determine whether or not the reconciliation can proceed. Where it

• Can do so, it will automatically issue the appropriate tax calculations (P800) to the customer and update their Reconciliation and Accounting records with regard to the year(s) concerned
• Cannot do so it will create an appropriate work item to allow the case to be manually reviewed

If the record has already been reconciled and further information (for example a P14 or P11D) is received, where the year concerned is

• 2007-08 or earlier, work item 037 ‘P14 EMPT created’ (PAYE93061) will be created to allow the case to be manually reviewed
• 2008-09 or later the system will look to automatically re-reconcile the year(s) concerned. Where it

• • Can do so, it will automatically issue the appropriate tax calculations (P800) to the customer and update their Reconciliation and Accounting records with regard to the year(s) concerned
  • Cannot do so, it will create an appropriate work item to allow the case to be manually reviewed

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Re-reconciling

Where a year has previously been reconciled and changes have been made on a customer’s record, for example 08-09 and 09-10 previously reconciled as multi year reconciliation and an employment is inserted for 07-08 but no cessation date is shown, the PAYE Service will expect a P14 for later years and the years concerned will no longer be ripe for reconciliation.

Where re-reconciliation is triggered

• Online - the following message will be displayed - ‘The system cannot re-reconcile the same tax years as previously reconciled. Further investigation is required’. Where you receive such a message, you will need to follow steps 2 - 6 of PAYE96245 to resolve matters
• Through batch - work item 315 - PAYE96245 will be created