The Income Tax (Pay As You Earn) Regulations 2003

Recovery from employee of tax not deducted by employer U.K.

72.—(1) This regulation applies if—

(a) it appears to the Inland Revenue that the deductible amount exceeds the amount actually deducted, and

(b) condition A or B is met.

(2) In this regulation [F1 and regulations 72A and 72B]—

• “the deductible amount” is the amount which an employer was liable to deduct from relevant payments made to an employee in a tax period;

• “the amount actually deducted” is the amount actually deducted by the employer from relevant payments made to that employee during that tax period;

• “the excess” means the amount by which the deductible amount exceeds the amount actually deducted.

(3) Condition A is that the employer satisfies the Inland Revenue—

(a) that the employer took reasonable care to comply with these Regulations, and

(b) that the failure to deduct the excess was due to an error made in good faith.

(4) Condition B is that the Inland Revenue are of the opinion that the employee has received relevant payments knowing that the employer wilfully failed to deduct the amount of tax which should have been deducted from those payments.

(5) The Inland Revenue may direct that the employer is not liable to pay the excess to the Inland Revenue.

[F2 (5A) Any direction under paragraph (5) must be made by notice (“the direction notice”), stating the date the notice was issued, to—

(a) the employer and the employee if condition A is met;

(b) the employee if condition B is met.

(5B) A notice need not be issued to the employee under paragraph (5A)(a) if neither the Inland Revenue nor the employer are aware of the employee’s address or last known address.]

(6) If a direction is made, the excess 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.

(7) If condition B is met, tax payable by an employee as a result of a direction carries interest, as if it were unpaid tax due from an employer, in accordance with [F3 section 101 of the Finance Act 2009].

(8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F1 Words in reg. 72(2) inserted (12.4.2004) by The Income Tax (Pay As You Earn) (Amendment) Regulations 2004 (S.I. 2004/851), regs. 1, 3(2)

F2 Reg. 72(5A)(5B) inserted (12.4.2004) by The Income Tax (Pay As You Earn) (Amendment) Regulations 2004 (S.I. 2004/851), regs. 1, 3(3)

F3 Words in reg. 72(7) substituted (with effect in accordance with art. 1(2) of the amending S.I.) by The Finance Act 2009, Sections 101 and 102 (Interest on Late Payments and Repayments), Appointed Days and Consequential Provisions Order 2014 (S.I. 2014/992), arts. 1(1), 9(3)(a)