SE12032 - PAYE avoidance: dealing with open Schedule E cases

Dealing with open Schedule E cases

Schedule E liability

Employees who receive non-cash remuneration often regard these awards as benefits in kind, assessable under Schedule E and return the asset awards on a form P11D.

Years up to and including 1995/96

For years up to 1995/6, make a Schedule E assessment in the alternative to the Regulation 80 determination, describing the non-cash remuneration as "bonus" or "remuneration". Do not give credit in the assessment for the Regulation 80 tax.

Write to the employer stating that:

• the Schedule E assessment is made "in the alternative"- this means it is an alternative assessment to the Regulation 80 determination
• the Revenue thinks that PAYE should have applied to the remuneration and if the Revenue succeeds in its arguments, credit will be given for the Regulation 80 tax in the Schedule E assessment
• if the Revenue does not succeed in its argument, the tax shown as underpaid in the assessment will be collected from the employee
• the Revenue will not seek to collect the tax due on the non-cash remuneration from both the employer and employee.

When making an assessment for 1994/95 or 1995/96, include any charge arising under Section 144A ICTA1988 (see SE11950).

The Schedule E assessment will give rise to an underpayment -

• if the employee appeals against the assessment, ensure that the underpayment is not transferred to the underpayments duplicate
• if the employee does not appeal against the assessment make sure that any part of the underpayment relating to the non-cash remuneration is not transferred to the underpayment duplicate until the PAYE dispute is settled.

1996/97 onwards - Self Assessment

Where an employee has received non-cash remuneration do not open an enquiry under Section 9A unless there are other reasons for doing so.

Where a Section 9A enquiry is already open and a non-cash payment is the only reason for that enquiry take no further action. If the employee seeks to close the enquiry, or in any case of difficulty, contact Employment Income Technical.