PAYE93057 - Reconcile individual: end of year reconciliation: work item 300 -tax calculation reason required (Action Guide)

Note: You will need to be familiar with the contents of PAYE93036 (Tax Calculation issues) before you proceed to clear work item 300.

In Bankruptcy cases please also refer to PAYE13063, an SA record should exist for the year of bankruptcy.

Where the PAYE Service automatically performs an end of year reconciliation and the result is an over / underpayment outside tolerances (PAYE93075) it will look to determine the reason(s) as to why the customer is over / underpaid. Where the system

Can determine at least one reason and up to 5 reasons as to why the customer is over / underpaid, the reason(s) concerned will be entered on the Tax Calculation (P800) and the calculation will be issued to the customer
Can determine more than 5 reasons as to why the customer is over / underpaid, the Tax Calculation (P800) will be issued with a note of explanation on it that a letter will follow explaining why the over / underpayment has occurred and work item 300 will be created to allow you to issue the letter concerned
For cases reviewed by the system up to and including July 2010 cannot determine any reasons as to why the customer is over / underpaid it will not issue the Tax Calculation (P800) and the case will be output as work item 300 to allow you to manually review the case. In a case where the tax calculation the work item refers to was undertaken as

- A single year reconciliation, a copy of the tax calculation will be retained on the system to allow you to update it to include the appropriate reason(s) before you approve the Tax Calculation / (P800) for issue
- Part of a multiple year reconciliation, copies of tax calculations covered within the reconciliation will not be retained and you will need to re trigger the reconciliation, to allow you to view the calculation(s), before you proceed to clear work item 300 in respect of the year(s) for which the system cannot identify any over / underpayment reasons for

For cases reviewed by the system from 1 August 2010 onwards cannot determine any reasons as to why the customer is over / underpaid, the Tax Calculation (P800) will be issued with a note on it of either

‘The reason for the underpayment is set out on the enclosed sheet’

‘The reason for the overpayment is set out on the enclosed sheet’

In both cases the information on the enclosed sheet is the P800 Tax Calculation itself, not a list of any type detailing underpayment / overpayment reasons

Work item 300 will show a series of numbers relating to the reason(s) the system has identified as to why the customer is over or underpaid but you will need to access the appropriate Overpayment Reasons screen (PAYE93040) or Underpayment Reasons screen (PAYE93045) for the year concerned to see the text explanations. In cases where the system cannot identify any overpayment / underpayment reasons, numbers will still be displayed against work item 300 (linked to the system identifying ‘no reasons’) but no reasons will be displayed on the appropriate Reasons screens.

In multiple year reconciliation (PAYE96201) case

Where the system cannot identify an over / underpayment reason(s) in respect of any of the years covered, copies of the tax calculations within reconciliation will not be retained on the system and you will need to re trigger the reconciliation, (commencing from the year on work item 300) before you proceed to clear work item 300 in accordance with the action guide detailed below
The year shown on work item 300 will be the first year of the multiple year reconciliation and you will need to review the tax calculations for all years within the reconciliation to determine and update the year(s) the system is unable to identify any over or underpayment reasons or, it can identify more than 5 for
Where all years within the reconciliation can be cleared as ‘Reconciled - Balanced’, work item 300 will be created but there will be no tax calculations to review for issue. In these cases only do not follow the Action Guide below but proceed as follows

- Update the work item with a note of ‘Multiple year reconciliation case and all years Reconciled - Balanced: work item closed’
- Close the work item

Where the case has the S218 indicator set (that is S810 cases) you will have to follow the appropriate guidance at steps 2 - 6 below with regard to each year within the reconciliation

During the course of clearing work item 300

Where the reconciliation result(s) has an impact on coding, at the point at which you approve the calculation(s), you will be presented with a message that advises you that automatic coding has been triggered and you will not be required to carry out a review of the customers CY or CY+1 tax codes for this issue

However

Where you have amended an IABD value during the course of resolving the work item you will need to review and if required manually update the customers CY and / or CY+1 tax codes to account for the new IABD values

To clear work item 300 follow steps 1 - 11 below. This guide is presented as follows.

Initial review	Step 1
Section 810 (formerly S128) cases	Steps 2 - 6
Other cases	Steps 7 - 9
Update / close work item	Steps 10 - 11

Initial review

1.	Review the Indicators screen to determine whether or not the S128 indicator is set. If the indicator is
	Set, go to step 2
	Not set, go to step 7

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Section 810 (formerly S128) cases

2.	Review work item 300 and the relevant tax calculation to determine how many reasons for over / underpayment the system found. Where the system found
	No reasons for the over / underpayment, the Tax Calculation (P800) will not have been issued and you should go to step 3
	More than 5 reasons for the over / underpayment, the Tax Calculation (P800), will have been issued and you should go to step 5
3.	Where the system has not been able to identify any over / underpayment reason a Tax Calculation (P800) will not have already been issued to the customer and you should
	Take a print of the Tax Calculation screen and cancel out of it using the [Cancel] button
	Review the income and allowances in the calculation to determine those to be excluded when taking account of Section 810
	Take screen prints of the IABD screens that will need to be changed to exclude the income / allowances
	Remove the income/ allowances concerned from within the IABD screens and reconcile the year again
	Compare the results of the new tax calculation with the screen print taken of the original (non-Section 810) calculation
	Go to step 4
4.	Where the
	New (Section 810) calculation is most beneficial
	Review and if required update the reasons for the over / underpayment automatically selected by the system
	Approve the calculation for issue
	Go to step 10
	Initial (non Section 810) calculation was most beneficial
	Cancel out of the new calculation using the [Cancel] button
	Re-input into IABD the income / allowances removed from the original calculation and reconcile the case. The resulting tax calculation should be the same as the original calculation
	Review the calculation and select the appropriate reasons (up to 5) as to why the customer is over / underpaid
	Approve the calculation for issue
	Go to step 10
5.	Where the system has identified more than 5 over / underpayment reason a Tax Calculation (P800) will have already been issued to the customer with an appropriate note of explanation on it that a letter will follow explaining why the over / underpayment has occurred and you should
	Take a screen print of the tax calculation and cancel out of it using the [Cancel] button
	Review the income and allowances in the calculation to determine those to be excluded when taking account of Section 810
	Take screen prints of the IABD screens that will need to be changed to exclude the income / allowances
	Remove the income / allowances concerned from within the IABD screens and reconcile the year again
	Compare the results of the new tax calculation with the screen print taken of the original (non-Section 810) calculation
	Go to step 6
6.	Where the
	New (Section 810) calculation is most beneficial
	Review and if required update the reasons for the over / underpayment automatically selected by the system
	Enter a freehand note on the appropriate Reasons screen of ’This calculation replaces the one dated DD/MM/CCYY’. The details entered as DD/MM/CCYY should be the date on which the original (now superseded) tax calculation was issued
	Approve the calculation for issue
	Go to step 10
	Initial (non Section 810) calculation was most beneficial
	Prepare and issue a freehand letter to the customer explaining the reason(s) as to why they are over / underpaid
	Go to step 10

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Other cases

7.	Review work item 300 and the relevant tax calculation to determine how many reasons for over / underpayment the system found. Where the system found
	No reasons for the over / underpayment, the Tax Calculation (P800) will not have been issued and you should go to step 8
	More than 5 reasons for the over / underpayment, the Tax Calculation (P800), will have been issued and you should go to step 9
8.	Where no reasons have been identified as to why the customer is over / underpaid, review the tax calculation for the year and other PAYE Service screens to determine why the customer is over / underpaid and where the reasons found are
	Available to select in the Over / Underpayment Reasons screens
	Select the reasons concerned
	Approve the calculation for issue
	Go to step 10
	Not available to select in the Over / Underpayment Reasons screens
	Enter a free hand note of ‘A letter explaining the overpayment will follow’. Where the outcome of the calculation is that the customer is underpaid, the wording entered into the reason field should say underpayment rather than overpayment
	Approve the calculation for issue
	Prepare and issue a freehand letter to the customer explaining the reasons for the over / underpayment
	Go to Step 10
9	Where more than 5 over / underpayment reasons have been identified, review the tax calculation and other PAYE Service screens ( for example IABD) for the year, to determine why the customer is over / underpaid and
	Prepare and issue a freehand letter to the customer explaining the reasons for the over / underpayment
	Go to Step 10

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Update / close work item

10.	Update work item 300 with details of the action taken
11.	Close the work item

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