PAYE93040 - taxpayer end of year: reviewing liability at year end: informal calculations: explanation required

It is mandatory to enter an explanation in COP Function AS Format 2A in every case. You will not be allowed to move on to the next screen until you have entered some text. You may return to the explanation once you know the result of the computation, but you must take care not to finalise the calculation before you have given a full explanation.

You are likely to prevent customer contact at a later date if you give a good explanation of

• The reason for the calculation
• The resulting overpayment or underpayment, and
• How the amount will be repaid or collected

The remainder of this subject is presented as follows

Explanations in revise basic cases

Explanations in dividend income and associated tax credits cases

Long explanations

SEES Notes Paster

Explanations in revise basic cases

Where there has been an entry in the Revise Basic Field in COP Function AS Format 1 the computer system will automatically generate part of an explanation in Format 2. This will read ‘The Basic Rate Band is extended to £ (amount entered in Revise Basic) from £ (usual value for year) to provide higher rate relief for’. You will then need to complete the explanation and say what the higher rate relief is for, for example Gift Aid payments.

Note: Do not enter any additional explanation in Format 2A, as it will not be carried forward. Any additional explanation should be entered in Format 2.

Explanations in dividend income and associated tax credits cases

An explanation will be generated automatically in these cases.

In all cases where there is dividend income it is necessary to restrict the amount of the overpayment because tax credits associated with dividends are not refundable. Where tax is shown to be overpaid for the year the computer system will automatically restrict the amount of the overpayment to be refunded to the total of tax entered against sources with a type ‘E’ or ‘I’.

In these cases the printed output will show the text ‘Dividend income is taxed at 10 per cent up to the basic rate limit and at 32.5 per cent after that. There is an associated tax credit for each dividend that is set against the tax due - but the tax credit cannot be repaid.

Long explanations

If you have entered a long explanation and automatic explanations are also necessary there may be more text than can be printed. If this happens you will need to shorten your explanation. In a very few cases it may be necessary to simply say that a letter will follow and send a separate letter that contains a full explanation.

SEES Notes Paster

The creation and cleansing of free format electronic notes is important as it ensures that records are complete and up to date.

One of the most effective ways of doing this is to make sure that you make proper use of the electronic notes field. You should refer to the ‘Electronic Recording of Information’ website on the Intranet for departmental instructions on how to work with electronic free format notes.

To help you copy and paste standard notes into free format fields a tool has been developed and incorporated into Shared Expertise to Exploit Software (SEES) Clerical Toolkit. This can be located from the SEES dropdown menu by selecting Notes Paster.

You should use this tool wherever possible to copy and paste standardised notes. The Paster will automatically transfer your Pay Identity Number, the date and office location to the note.

The paster is populated with a variety of Customer Service messages for PAYE informal tax calculations, for use with COP Function AS and you should familiarise yourself with these notes in order to ascertain which notes or explanations are available to you.