PAYE93150 - taxpayer end of year: reviewing liability at year end: use of estimated figures

It is no longer normal practice to use estimated figures when issuing an informal calculation. All taxpayers that are required to complete an income tax return will be dealt with through SA rather than COP.

Estimated benefits figures can be used for in-year repayments where the benefits are included in the code and do not fluctuate greatly from year to year. This will reduce the burden on employers.

When you use estimated figures to review the year and either an under or overpayment arises that is outside the tolerances, you should follow the action guide at PAYE93151.

The remainder of this subject is presented as follows

Form P810 issued but not returned

Form P810 not issued

JSAP estimated

Form P810 issued but not returned

No action should be taken before 31 January in respect of cases that remain open because the P810 has not been returned unless prompted by customer contact.

After 31 January a base calculation (working sheet) may be prepared, based upon the information that we already hold, to decide whether a potential over / underpayment that is outside the tolerances is due. The base calculation should

• Include the sources of income, if any, for which the P810 was issued
• Exclude any coding relief (EXP, PPR, RAR, PSUBS, LOAN or CHR) previously allowed for the year

If there is likely to be a potential under / overpayment that falls outside the tolerances you should follow the action guide at PAYE93151.

Where a coding restriction has been made for the P810 source for the year under review, the tax calculation for the relevant year should be based on the amounts coded.

Where the customer has recently been refined from SA it is possible that no income has been coded out for the year covered by the P810, for example, where the customer is higher rate (HR) and in receipt of taxed savings and investment income. For such cases you should use the figures shown on the last SA tax return.

Failure to return the P810 will also result in

• Related relief(s) being withdrawn from the tax coding for CY+1 and
• Restriction for form P810 items being increased in the usual way (normally 50 per cent each year, apart from OCCP and PPA which are increased by 10 per cent)

Form P810 not issued

Where a form P810 has not been issued automatically but the CY-1 tax code includes HRA and the case is not cleared automatically by the computer system you will need to include the investment income in your calculation and in any informal calculation that you issue to the customer.

The most common cases will be those where the customer has recently been refined from SA.

You may include an estimated amount of investment income based on the amounts included in the most recent SA return, including dividends and interest. Your explanation should clearly state that the amounts are estimated and that if actual figures are provided then the calculation will be revised accordingly.

If you do need to contact the customer for any reason, for example, form P87 is requested or required, you should also send a typed letter asking for all the information you need to issue

• An accurate calculation for the previous year and
• An accurate tax code for the current year

If the information is not provided you should estimate the income.

Details of expenses do not need to be provided on form P87 and if the necessary details are provided by other means, and you do not require any further information, you should estimate the amounts of investment income, as detailed above.

Where a P810 has not been issued because the year under review is an intervening year since the last P810 was issued, the figures to use in an informal calculation should be those coded for the year. These will have been based on the amounts shown in the last completed P810. However if there is more up to date information held since the last P810 was returned, then the later figures should be used.

JSAP estimated

When a claim to JSA ceases during the year, form P45U(1) is sent by DWP, but no P14U at the end of the year.

Where the details from the form P14U(1) are not posted to the taxpayer’s record, then details of JSA were previously requested using forms P561A and P561B. These forms are no longer issued and therefore where the customer has received JSA the taxable amount to include in your calculation should be estimated in all cases.

Where the estimate results in the base calculation indicating a repayment or an underpayment may be due, see ‘Use of estimated figures (Action Guide)’ at PAYE93151.

A ready reckoner is available on SEES to help you calculate estimated amounts of JSAP more quickly or, for open cases the JSA credits (weekly rate of JSA) from the PAYE Browser.