The Income Tax (Employments) (No. 21) Regulations 1991

Statutory Instruments

1991 No. 1080

INCOME TAX

The Income Tax (Employments) (No. 21) Regulations 1991

Made

25th April 1991

Laid before the House of Commons

26th April 1991

Coming into force

19th May 1991

The Commissioners of Inland Revenue, in exercise of the powersconferred on them by section 203 of the Income and Corporation Taxes Act1988(1), hereby make the following Regulations:

Citation and commencement

1.  These Regulations may be cited as the Income Tax (Employments) (No.21) Regulations 1991 and shall come into force on 19th May 1991.

Interpretation

2.  In these Regulations“the principal Regulations” means the Income Tax (Employments) Regulations 1973(2) and“Regulation” means a regulation of those Regulations.

Amendments to the Principal Regulations

3.  In Regulation 2(1)(3)—

(a) after the definition of“income tax month” there shall be inserted—

• ““income tax period” means income tax quarter while Regulation 26A has effect, butotherwise means income tax month;

• “income tax quarter” means the period beginning on the 6th day of April and ending onthe 5th day of July, or beginning on the 6th day of July and ending onthe 5th day of October, or beginning on the 6th day of October andending on the 5th day of January or beginning on the 6th day of Januaryand ending on the 5th day of April;”

(b) in the definition of“year” after the word“assessment” there shall be inserted“and“current year” shall be construed accordingly”.

4.  For Regulation 26 there shall be substituted—

“Payment of tax monthly by employer

26.— (1) Subject to Regulations 26A and 27A(8), the employer shall pay theamount specified in paragraph (2) to the Collector within 14 days of theend of every income tax month.

(2) The amount specified in this paragraph is—

(a) all amounts of tax which the employer was liable under theseRegulations to deduct from emoluments paid by him in that income taxmonth, and

(b) all amounts of tax by which deductions in that income tax month werereduced in accordance with Regulation 24(3)(b), being amounts in respectof which a reduction was claimed in an earlier income tax month inaccordance with sub-paragraph (c) below,

reduced by—

(c) any amounts calculated as due to be repaid in that income tax month,but whose repayment was precluded during that income tax month byRegulation 24(3), and

(d) any amounts which he was liable to repay in that income tax month(excepting any amounts for which a reduction was claimed in any previousincome tax month, or which are being recovered from the Commissioners ofInland Revenue under Regulation 26B(5)).

Payment of tax quarterly by employer

26A   .—

(1) Subject to Regulation 27A(8), the employer shall pay the amountspecified in paragraph (2) to the Collector within 14 days of the end ofevery income tax quarter where—

(a) the employer has reasonable grounds for believing that the conditionspecified in paragraph (3) applies and so chooses, or

(b) Regulation 21 applies.

(2) The amount specified in this paragraph is—

(a) all amounts of tax which the employer was liable under theseRegulations to deduct from emoluments paid by him in that income taxquarter, and

(b) all amounts of tax by which deductions in that income tax quarterwere reduced in accordance with Regulation 24(3)(b), being amounts inrespect of which a reduction was claimed in an earlier income taxquarter in accordance with sub-paragraph (c) below,

reduced by—

(c) any amounts calculated as due to be repaid in that income taxquarter, but whose repayment was precluded during that income taxquarter by Regulation 24(3), and

(d) any amounts which he was liable to repay in that income tax quarter(excepting any amounts for which a reduction was claimed in any previousincome tax quarter, or which are being recovered from the Commissionersof Inland Revenue under Regulation 26B(5)).

(3) The condition specified in this paragraph is that the averagemonthly total amount to be paid to the Collector under—

(a) Regulation 26,

(b) the Social Security Act 1975(4) and the Social Security (Contributions) Regulations1979(5) or, as the case may be, the Social Security (NorthernIreland) Act 1975(6) and the Social Security (Contributions) Regulations(Northern Ireland) 1979(7), and

(c) section 559 of the Income and Corporation Taxes Act 1988 andthe Income Tax (Sub-Contractors in the Construction Industry)Regulations 1975(8),

will be less than £400 for income tax months falling within the current year.

Payment of tax by employer — further provisions

26B.— (1) The Collector shall give a receipt to the employer for the totalamount paid under Regulation 26 or 26A if so requested; but if a receiptis given for the total amount of tax and any earnings-relatedcontributions paid at the same time, then no separate receipt for taxonly need be given.

(2) If the amount specified in Regulation 26(2) or 26A(2) which theemployer is liable to pay to the Collector exceeds the amount actuallydeducted by him from emoluments paid during the relevant income taxperiod, the Collector, on being satisfied by the employer that he tookreasonable care to comply with these Regulations and that theunder-deduction was due to an error made in good faith, may direct thatthe amount of the excess shall be recovered from the employee, and,where the Collector so directs, the employer shall not be liable to paythe amount of that excess to the Collector.

(3) If the amount specified in Regulation 26(2) or 26A(2) which theemployer is liable to pay to the Collector exceeds the amount actuallydeducted by him from emoluments paid during the relevant income taxperiod, the Commissioners of Inland Revenue, if they are of the opinionthat an employee has received his emoluments knowing that the employerhas wilfully failed to deduct the amount of tax which he was liable todeduct under these Regulations from those emoluments, may direct thatthe amount of the excess shall be receovered from the employee, and,where the Commissioners so direct, the employer shall not be liable topay the amount of that excess to the Collector.

(4) If a difference arises between the employer and the employee—

(a) as to whether the employer has deducted tax, or

(b) as to whether, having regard to Regulation 23, the employer isdeemed to have deducted tax, or

(c) as to the amount of the tax that has been deducted, or

(d) as to the amount of the tax that is deemed, having regard toRegulation 23, to have been deducted

from emoluments paid to the employee, the matter shall, for the purpose of ascertaining the amount of any tax to be recovered from the employee under paragraph (2) or (3), be determined by—

(i) such General Commissioners as the Commissioners of Inland Revenue,having regard to all the circumstances, shall direct or

(ii) in the case of a non-resident employee, the Special Commissioners,

and the determination of those Commissioners shall be final.

(5) If the total of the amounts which the employer was liable to repayduring any income tax period exceeds the total of the amounts which hewas liable to deduct during that income tax period, the employer shallbe entitled to deduct the excess from any subsequent payment which he isliable to make to the Collector under Regulation 26 or 26A or to recoverthat excess from the Commissioners of Inland Revenue; but that excessshall not include any amount for which a reduction was made in a paymentunder Regulation 26 or 26A in a previous income tax period, or anyamount which is otherwise being recovered from the Commissioners ofInland Revenue.

(6) If he has not made any repayment of tax withheld under paragraph (3)of Regulation 24 within 42 days after the relevant event specified insub-paragraph (a) of that paragraph, the employer shall pay the tax notrepaid to the Collector forthwith, and paragraph (1) of this Regulationshall apply to the amount paid.”

5.  In Regulation 27(9)—

(a) for the word“month” wherever it appears there shall be substituted the word“period”;

(b) in paragraphs (1) and (3) after“Regulation 26” there shall be inserted“or 26A”;

(c) in paragraph (1) for the word“that Regulation” there shall be substituted the words“those Regulations”;

(d) in paragraph (2) for the word“months” wherever it appears there shall be substituted the word“periods”.

6.  In Regulation 27A(10)—

(a) for the word“month” wherever it appears there shall be substituted the word“period”;

(b) after“Regulation 26” wherever appearing there shall be inserted“or 26A”;

(c) in paragraph (5) for the word“months” wherever it appears there shall be substituted the word“periods”.

7.  In Regulation 28(11)—

(a) in paragraph (1) after“Regulation 26” there shall be inserted“or 26A”;

(b) for the word“month” wherever it appears there shall be substituted the word“period”.

8.  In Regulation 29(12)—

(a) in paragraphs (1) and (2)(b) after“Regulation 26” there shall be inserted“or 26A”;

(b) in paragraph (2)(b) for the word“months” there shall be substituted the word“periods”;

(c) in paragraph (3) for the words“Regulation 26(3) or (4)” there shall be substituted the words“Regulation 26B(2) or (3)”;

(d) in paragraph (4) for“Regulation 26(4)” there shall be substituted“Regulation 26B(3)”.

9.  In Regulation 29A(13)—

(a) in paragraphs (1)(a) and (6) after“Regulation 26” there shall be inserted“or 26A”;

(b) in paragraph (2) for the words“income tax months” there shall be substituted the words“income tax periods”;

(c) in paragraph (2) for the words“that month or months” there shall be substituted the words“that period or periods”.

10.  In Regulation 32(14)for the words“income tax months” wherever they appear there shall be substituted the words“income tax periods”.

11.  In Regulation 34(14)—

(a) in paragraph (2)(b)(i) for the words“paragraph (7) of Regulation 26” there shall be substituted“paragraph (6) of Regulation 26B”;

(b) in paragraph (2)(b)(ii) for the words“paragraph (6) of Regulation 26” there shall be substituted“paragraph (5) of Regulation 26B”.

12.  In Regulation 51(15)—

(a) in paragraphs (3) and (4) before the words“quarter” and“quarters” wherever they appear there shall be inserted the words“income tax”;

(b) in paragraph (7) the words“; and the expression” onwards shall be omitted.

A. J. G. Issac

T. J. Painter

Two of the Commissioners of Inland Revenue

25th April 1991

Explanatory Note

(This note is not part of the Regulations)

These Regulations amend the Income Tax (Employments) Regulations1973 (“the PAYE Regulations”) to allow certain employers to pay deductions under Pay As You Earn“PAYE”) to the Inland Revenue quarterly rather than monthly. The amendedrules will apply to employers whose average monthly payments of PAYE,National Insurance Contributions (“NIC”) and the statutory deduction imposed by section 559 of the Incomeand Corporation Taxes Act 1988 on payments to sub-contractors (“the statutory deduction”) are expected to be less than £400 in total, and will applyto payments on and after 19th May 1991.

Regulation 1 provides for citation and commencement and regulation 2 contains definitions.

The remainder of these Regulations make amendments to the PAYE Regulations.

Regulation 3 provides for further definitions to be inserted inRegulation 2(1) of the PAYE Regulations.

Regulation 4 substitutes three new Regulations in the PAYE Regulations (Regulations 26, 26A and 26B) in place of the previous Regulation 26. The new Regulation 26 contains the basic rule that an employer shall pay deductions under PAYE to the Inland Revenue monthly. The new Regulation 26A provides that an employer who expects that his average monthly payments of PAYE, NIC and thestatutory deduction will be less than £400 in total may paydeductions under PAYE quarterly and not monthly. Regulation 26B containsfurther provisions relating to the payment of tax by an employer, andthese apply whether deductions under PAYE are being paid monthly orquarterly.

Regulations 5, 6, 7, 8, 9, 10 and 11 amend Regulations 27,27A, 28, 29, 29A, 32 and 34 of the PAYE Regulations respectively toensure that these PAYE Regulations apply to employers paying quarterlyas well as to employers paying monthly.

Regulation 12 amends Regulation 51 of the PAYE Regulations. The amendments made are consequential upon the introduction of the new definitions in Regulation 2(1) of the PAYE Regulations.

(1)

1988 c. 1; section 203 was amended by sections 35 and 128of, and paragraph 4 of Schedule 3 to, the Finance Act 1988 (c. 39), andby sections 45(3) and 187(1) of, and Part IV of Schedule 17 to, theFinance Act 1989 (c. 26), and extended by section 98A of the TaxesManagement Act 1970 (c. 9) as inserted by section 165(1) of the FinanceAct 1989.

(2)

S.I. 1973/334.

(3)

Regulation 2 was amended by S.I. 1974/2102, 1976/381,1981/44, 1982/66 and 1986/2212.

(4)

1975 c. 14.

(5)

S.I. 1979/591

(6)

1975 c. 15.

(7)

S.R. 1979 No. 186.

(8)

S.I. 1975/1960; a relevant amending instrument is S.I.1991/1081..

(9)

Regulation 27 was substituted by S.I. 1990/79.

(10)

Regulation 27A was substituted by S.I. 1985/350 andamended by S.I. 1990/79.

(11)

Regulation 28 was amended by S.I. 1984/1858 and1985/350.

(12)

Regulation 29 was amended by S.I. 1985/350 and 1988/637.

(13)

Regulation 29A was inserted by S.I. 1988/637 and amendedby S.I. 1989/1289 and 1990/79.

(14)

Regulation 32 was amended by S.I. 1981/44 and 1988/637.

(15)

Regulation 51 was amended by S.I. 1981/44, 1984/1858 and1990/79.