PAYE93055 - taxpayer end of year: reviewing liability at year end: initial review

This subject is presented as follows

Computer action

Tax table test

Facts which prevent clearance

Checks for further points preventing clearance

HRS signal

P810 has been issued

Computer action on cases cleared

Computer action

The Initial Review is carried out by the computer system. The aim is to clear cases where the tax deducted is roughly correct and there is no other reason to make a detailed review. The computer system carries out the review by

• Comparing each employee’s / pensioners end of year details (where held) with the facts that are held on that person’s computer record
• Using guidelines to leave certain cases open and clear the rest

The case is reviewed in the following stages

• Tax table test is carried out
• Checks are made for basic features which prevent clearance in all cases
• Checks are made for further points that need review, depending on the type of record

The object of the review in each case is to clear the case if possible, or leave the case open and enter it on a list for review (eOpen List)

Tax table test

The computer system carries out a tax table test in all cases. Before the test is done, an adjustment to pay is made in week 53, 54 and 56 cases. The test

• Calculates the tax due in accordance with week 52 of the tax table
• Uses pay entered from the P14 details
• Uses the latest code on that year’s record (whether operated or not)
• Uses the cumulative basis, unless the last code was week 1
• Compares the figure of tax with the sum of tax paid as entered on the record and with any potential underpayment arising in CY-1

If there is a difference between the tax due and the sum of tax paid, (including any potential CY-1 underpayment) in a main source case, the record is left open if the difference is outside the tolerances.

The amount of tax underpaid or overpaid is shown after the explanation FAILED TAX TABLE LIABILITY TEST on eOpen Lists.

Facts which prevent clearance

If any of the following apply the computer system will leave the case open for further review.

• POTA / POTAC signal for the year of review is set
• MREV signal for the year of review is set
• There is a cancelled item for the year of review that is not corrected
• For the year before the year of review

• FT is the latest code on the record for the year of review (regardless of whether the code has been operated or not)
• The amount of U/P CODED for the year of review exceeds the U/P B/F for that year
• The record shows an O/P B/F for the year of review
• The HOW CLEARED field is noted WS for the year of review
• There are no coding details on the record for the year of review

Checks for further points preventing clearance

Where the case passes the tests in the first two stages the computer system considers the type of record. It then checks further points according to whether the record is for a subsource or a GCD main source.

HRS signal

When forms P14 are posted to a PAYE customers record either automatically or manually, the computer system will automatically set the HRS signal where

• The Initial Review includes tax calculated at a higher rate, and
• The HRS signal is not already set on the customer record

The signal will be set irrespective of the record type and the presence of any SA signal.

The computer system will not remove the HRS signal where no higher rate liability is calculated during the review. You will therefore need to review HRS signals when reviewing open cases or issuing informal tax calculations.

P810 has been issued

Where form P810 has been issued for a year but has not been returned the case will remain open and appear on eOpen List in due course.

Where form P810 is logged as having been received, the computer system will treat the year in the normal way and clear the year as appropriate. No further action should be required where coding deductions were correct.

Computer action on cases cleared

Once the computer has cleared the case ‘N’, ‘Z’ or ‘T’, the following details will be noted in Clearance Summary

• For the year of review LAST YEAR CLEARED
• Whether cleared ‘N’, ‘Z’, or ‘T’
• The office number
• The O/P-U/P AT 5/4

If there is no underpayment in the O/P-U/P field for the year of review and no potential underpayment arose in that year, the entry in Clearance Summary will be 0.00.

Where there is an underpayment in the O/P-U/P field for the year of review or a potential underpayment arose in that year, Clearance Summary will show

• The amount of the underpayment in the O/P-U/P space and
• The potential underpayment less any U/P coded for the year of review
• A minus sign for the year of review (the minus sign precedes the figure, for example, -£49.00)