The Income Tax (Pay As You Earn) (Amendment) Regulations 2008

Amendment of Income Tax (Pay As You Earn) Regulations 2003

7.  Insert after regulation 72D—

“Conditions where regulation 72F applies

72E.— (1) Regulation 72F applies where—

(a) an employee has received a relevant payment;

(b) it appears to HMRC that an amount intended to represent tax on the payment—

(i) has been self-assessed, or

(ii) has not been self-assessed, but has been paid under section 59A TMA(1) (payments on account of income tax), section 559A of ICTA(2) (treatment of sums deducted under s.559 (sub-contractors)) or section 62 of the Finance Act 2004(3) (treatment of sums deducted (sub-contractors));

(c) any of conditions A, B and C is met;

(d) a trigger event has occurred; and

(e) a trigger event did not occur before 6th April 2008.

(2) Condition A is that it appears to HMRC that the amount which the employer was liable to deduct—

(a) from the relevant payment; or

(b) in the case of a notional payment, from other relevant payments,

exceeds the amount actually deducted.

(3) Condition B is that it appears to HMRC that the amount for which the employer was required to account under regulation 62(5) (notional payments) in respect of the relevant payment exceeds the amount actually accounted for.

(4) Condition C is that—

(a) tax on the relevant payment was included in a determination under regulation 80 (determination of unpaid tax and appeal against determination); and

(b) the full amount of the determination is not paid within 30 days from the date on which the determination became final and conclusive.

(5) The following are trigger events—

(a) HMRC serve notice of a determination under regulation 80 that includes tax on the relevant payment;

(b) HMRC receive a return under section 8 of TMA(4) (personal return) which includes a self-assessment which includes tax on the relevant payment as tax treated as deducted;

(c) HMRC receive—

(i) an amended return under section 9ZA of TMA(5) (amendment of personal or trustee return by taxpayer), or

(ii) a claim under section 33 of TMA(6) (error or mistake),

which includes tax on the relevant payment as tax treated as deducted;

(d) HMRC receive a letter of offer.

(6) In paragraph (5)—

“letter of offer” means an offer in writing by the employer to agree an amount in settlement of the employer’s liability to pay an amount that includes tax on the relevant payment;

“tax treated as deducted” has the meaning given by regulation 185(6).

(7) For the purposes of this regulation tax is self-assessed if—

(a) it is included in a return under section 8 of TMA which includes a self-assessment; and

(b) ignoring any relevant credit, the tax is or would be assessed as payable by way of income tax.

(8) In paragraph (7), “relevant credit” means—

(a) a payment made under section 59A of TMA (payments on account of income tax) or 59B(7) (payment of income tax and capital gains tax); or

(b) tax deducted at source or tax treated as deducted (within the meaning given by regulation 185(6)).

Recovery from employee of tax that has been self-assessed etc.

72F.— (1) Where this regulation applies, HMRC may direct that the employer is not liable to pay an amount of tax to them.

(2) The direction may be in respect of one or more amounts that appear to HMRC to fall within regulation 72E(1)(b)(i) and (ii).

(3) A direction must be made by notice to both the employer and the employee, stating—

(a) the date the notice was issued;

(b) the amount (or amounts) within regulation 72E(1)(b) to which it relates; and

(c) which of conditions A, B and C in regulation 72E have been met.

(4) A direction may be combined with one or more other directions relating to the same employer and may be made by issuing one notice to the employer, but each employee must be issued with a separate notice.

(5) A notice need not be issued to the employee if neither HMRC nor the employer are aware of the employee’s address or last known address.

(6) The amount specified in a notice to the employee must not be added under regulation 185(5) or 188(3)(a) (adjustments to total net tax deducted for self-assessments and other assessments) in relation to the employee.

Employee’s appeal against a direction notice

72G.— (1) An employee may appeal against a direction notice under regulation 72F—

(a) by notice to HMRC,

(b) within 30 days of the issue of the direction notice,

(c) specifying the grounds of the appeal.

(2) For the purposes of paragraph (1) the grounds of appeal are that—

(a) the employee did not receive a relevant payment;

(b) the amount specified in the notice is incorrect, because all or part of it did not fall within regulation 72E(1)(b)(i) or (ii);

(c) no trigger event within regulation 72E(5) occurred; or

(d) a trigger event within regulation 72E(5) occurred before 6th April 2008.

(3) On an appeal under paragraph (1) the Commissioners may—

(a) if it appears to them that the direction should not have been made, set aside the direction; or

(b) if it appears to them that the amount specified in the notice is incorrect, increase or reduce the amount accordingly.”.

(1)

1970 c. 9; section 59A was inserted by section 192 of the Finance Act 1994 (c. 9) and amended by section 108 of the Finance Act 1995 (c. 4), section 126(1) of, and paragraph 2 of Schedule 18 to, the Finance Act 1996 (c. 8), section 145(7)(b) of the Finance Act 2003 (c. 14), paragraph 130 of Schedule 6 to the Income Tax (Earnings and Pensions) Act 2003 (c. 1), and paragraph 130 of Schedule 6 to the Income Tax (Trading and Other Income) Act 2005 (c. 5); there are other amendments but none is relevant.

(2)

1988 c. 1; section 559A was inserted by section 40(1) of the Finance Act 2002 (c. 23) and repealed by paragraph 9 of Schedule 12 to the Finance Act 2004 (c. 12) in relation to payments made on or after 6th April 2007, being the day appointed by order made under section 77 of that Act (see S.I. 2006/3240), subject to transitional provisions in that section.

(3)

2004 (c. 12); section 62 took effect at the same time as section 559A of ICTA was repealed (see footnote (b)).

(4)

Section 8 was substituted by section 90 of the Finance Act 1990 (c. 29) and amended by section 178 of the Finance Act 1994, section 121 of the Finance Act 1996 and section 88 of the Finance Act 2007 (c. 11); there are other amendments but none is relevant.

(5)

Section 9ZA was inserted by paragraph 2 of Schedule 29 to the Finance Act 2001 (c. 9) and amended by section 91 of the Finance Act 2007.

(6)

Section 33 was amended by paragraph 15 of Schedule 19 to the Finance Act 1998 (c. 36); there are other amendments but none is relevant.

(7)

Section 59B was inserted by section 193 of the Finance Act 1994 (c. 9) and amended by paragraph 131 of Schedule 6 to the Income Tax (Earnings and Pensions) Act 2003 (c. 1), paragraph 377 of Schedule 1 to the Income Tax (Trading and Other Income) Act 2005 (c. 5) and section 126 of the Finance Act 1996 (c. 8); there are other amendments but none is relevant.