SCHEDULE 4F31Provisions derived from the Income Tax Acts and the Income Tax (Pay As You Earn) Regulations 2003
PART I GENERAL
Interpretation1
F391
In this Schedule the “PAYE Regulations” means the Income Tax (Pay As You Earn) Regulations 2003.
2
In this Schedule, except where the context otherwise requires—
“aggregated” means aggregated and treated as a single payment under paragraph 1(1) of Schedule 1 to the Act;
“allowable pension contributions” means any sum paid by an employee by way of contribution towards a pension fund or scheme which is withheld from the payment of PAYE income and for which a deduction must be allowed from employment income under section 592(7) or 594(1) of the Taxes Act (exempt approved schemes and exempt statutory schemes);
F139“closed tax year” means any year preceding the current year and cognate expressions shall be construed accordingly;
“Compensation of Employers Regulations” means the Statutory Maternity Pay (Compensation of Employers) and Miscellaneous Amendments Regulations 1994 and the Statutory Sick Pay Percentage Threshold Order 1995
“deductions working sheet” means any form of record on or in which are to be kept the matters required by this Schedule in connection with an employee’s general earnings and earnings-related contributions or the form issued by the Inland Revenue under paragraph 31 or under regulation 35 of the PAYE Regulations (simplified deduction scheme);
“earnings-related contributions” means contributions payable under the Act by or in respect of an employed earner in respect of employed earner’s employment;
“employed earner” and “employed earner’s employment” have the same meaning as in the Act;
“employee” means any person in receipt of general earnings;
“employer” means the secondary contributor determined—
a
by section 7 of the Act;
b
under regulation 5 of, and Schedule 3 to, the Social Security (Categorisation of Earners) Regulations 1978; or
c
under regulation 122;
F254“general earnings” means so much of a person's remuneration or profits derived from employed earner's employment as constitutes earnings for the purposes of the Act;
F200...
“Inland Revenue” means any officer of the Board of Inland Revenue;
“mariner” has the same meaning as in regulation 115;
F230“non-Real Time Information employer” means an employer other than one within sub-paragraph (4);
F230“Real Time Information employer” has the meaning given in sub-paragraph (4);
F231...
“tax month” means the period beginning on the 6th day of any calendar month and ending on the 5th day of the following calendar month;
“tax period” means a tax quarter where paragraph 11 has effect, but otherwise means a tax month;
“tax quarter” means the period beginning on 6th April and ending on 5th July, or beginning on 6th July and ending on 5th October, or beginning on 6th October and ending on 5th January, or beginning on 6th January and ending on 5th April;
“voyage period” has the same meaning as in regulation 115;
“year” means tax year;
and other expressions have the same meaning as in the Income Tax Acts.
3
For the purposes of paragraphs 7(13), 9, 10, 11 and 22, “primary Class 1 contributions” and “earnings-related contributions” shall, unless the context otherwise requires, include any amount paid on account of earnings-related contributions in accordance with the provisions of regulation 8(6).
F2294
The following are Real Time Information employers for the purposes of this Schedule—
a
an employer who has entered into an agreement with HMRC to comply with the provisions of this Schedule which are expressed as relating to Real Time Information employers;
b
an employer within sub-paragraph (5);
F267c
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ; and
d
on and after 6th October 2013, all employers.
5
An employer is within this paragraph if the employer has been given a general or specific direction by the Commissioners for Her Majesty's Revenue and Customs before 6th October 2013 to deliver to HMRC returns under paragraph 21A of this Schedule (real time returns of information about payments of general earnings).
Multiple employersF402
1
If—
a
an employer has made an election under regulation 98 of the PAYE Regulations to be treated as a different employer in respect of each group of employees specified in the election, and
b
no improper purpose notice has been given, or if one has been given it has been withdrawn,
he shall be treated as having made an identical election for the purposes of this Schedule.
2
In this paragraph an “improper purpose notice” is a notice issued to the employer stating that it appears to the Inland Revenue that the election is made wholly or mainly for an improper purpose within the meaning of regulation 99(2) of the PAYE Regulations.
Intermediate employers3
1
Where an employee works for a person who is not his immediate employer, that person shall be treated as the employer for the purpose of this Schedule, and the immediate employer shall furnish the principal employer with such particulars of the employee’s F34general earnings as may be necessary to enable the principal employer to comply with the provisions of this Schedule.
This is subject to the qualification in sub-paragraph (4).
2
In this paragraph—
“the principal employer” means the person specified as the relevant person in the direction referred to in sub-paragraph (4), and
“the immediate employer” means the person specified as the contractor in that direction.
3
If the F35employee’s general earnings are actually paid to him by the immediate employer—
a
the immediate employer shall be notified by the principal employer of the amount of earnings-related contributions which may be deducted when F36those earnings are paid to the employee, and may deduct the amount so notified to him accordingly; and
b
the principal employer may make a corresponding deduction on making to the immediate employer the payment out of which F37those earnings will be paid.
4
5
Where an employee is paid a sickness payment which by virtue of regulation 23 is not made through the secondary contributor in relation to the employment—
a
the person making that payment shall furnish the secondary contributor with such particulars of that payment as may be necessary to enable the secondary contributor to comply with this Schedule; and
b
for the purposes only of this Schedule the secondary contributor shall be deemed to have made the sickness payment.
Employer’s earnings-related contributions4
F118Intermediaries4A
1
Where any payment of F119general earnings of an employee is made by an intermediary of the employer, the employer shall be treated, for the purposes of this Schedule other than–
a
paragraph 7(1),
b
paragraph 7(3)(a),
c
the references to a subsequent payment of F119general earnings or of monetary earnings in paragraph 7(3) and (8), and
d
paragraph 7(11),
as making the payment of those F119general earnings to the employee.
2
For the purposes of this paragraph, a payment of F119general earnings of an employee is made by an intermediary of the employer if it is made–
a
either–
i
by a person acting on behalf of the employer and at the expense of the employer, or
ii
by a person connected with him, or
b
by trustees holding property for any persons who include, or class of persons which includes, the employee.
3
Section 839 of the Taxes Act (connected persons) applies for the purposes of this paragraph.
F33Continuation of proceedings etc.5
Any legal proceedings or administrative act authorised by or done for the purposes of this Schedule and begun by one Inland Revenue officer may be continued by another officer, and any officer may act for any division or other area.
PART II DEDUCTION OF EARNINGS-RELATED CONTRIBUTIONS
Deduction of earnings-related contributions6
1
Every employer, on making during any year to any employee any payment of F71general earnings in respect of which earnings-related contributions are payable, or are treated as payable, or on making any payment of statutory maternity pay—
a
shall, if he has not already done so, prepare, or in the case of an employee to whom F72regulation 35 of the PAYE Regulations (simplified deduction scheme) applies, maintain a deductions working sheet for that employee, and
b
may deduct earnings-related contributions in accordance with this Schedule.
F1401A
Where a liability to pay retrospective contributions has arisen in respect of an employee, an employer shall amend the relevant deductions working sheet or where necessary prepare one in respect of that employee.
2
Subject to sub-paragraph (3), an employer shall not be entitled to recover any earnings-related contributions paid or to be paid by him on behalf of any employee otherwise than by deduction in accordance with this Schedule.
3
Sub-paragraph (2) does not apply to secondary Class 1 contributions in respect of which an election has been made jointly by the secondary contributor and the employed earner for the purposes of paragraph 3B(1) of Schedule 1 to the Act (election in respect of transfer of secondary contribution liability on F122relevant employment income) F3 if the election provides for the collection of the amount in respect of which liability is transferred.
Calculation of deduction7
1
Subject to sub-paragraph (2), on making any payment of F41general earnings to the employee, the employer may deduct from those F41general earnings the amount of the earnings-related contributions based on those F41general earningsF126... which the employee is liable to pay under section 6(4) of the Act F133(the “section 6(4)(a) amount”).
2
Where two or more payments of F41general earnings fall to be aggregated, the employer may deduct the amount of the earnings-related contributions based on those F41general earnings, which are payable by the employee, either wholly from one such payment or partly from one and partly from the other or any one or more of the others.
F1293
If the employer–
a
b
is treated as making a payment of F41general earnings by paragraph 4A,
he may recover, in a case falling within paragraph (a) the amount not so deducted or, in a case falling within paragraph (b) the section 6(4)(a) amount, by deduction from any subsequent payment of F41general earnings made by the employer to that employee during F26the same year and, where the case falls within paragraph (b) F59or sub-paragraph 4(a) or (f).
This sub-paragraph is subject to sub-paragraphs (4) and (5).
F1413A
Where an amount has been treated as retrospective earnings paid to or for the benefit of an employee, the employer may deduct the retrospective contributions based on those earnings from any payment of general earnings made by him to that employee—
a
after the relevant retrospective contributions regulations come into force, and
b
during the same and the following year.
This sub-paragraph is subject to sub-paragraph (5).
4
Sub-paragraph (3) applies only where—
a
the under-deduction occurred by reason of an error made by the employer in good faith;
b
c
the under-deduction occurred as a result of the cancellation, variation or surrender of the contracting-out certificate issued in respect of the employment in respect of which the payment of F41general earnings is made; or
d
F60f
the payment in question is made to a person whose place of employment is outside the United Kingdom and on whose general earnings Class 1 contributions are, but income tax is not, payable.
5
For the purposes of sub-paragraphs (3), F142(3A), (4), (8) and (11)—
a
the amount which by virtue of those sub-paragraphs may be deducted from any payment, or from any payments which fall to be aggregated, shall be an amount in addition to, but not in excess of, the amount deductible from those payments under the other provisions of this Schedule; and
b
for the purposes of Part III of this Schedule an additional amount which may be deducted by virtue of those sub-paragraphs F127in a case falling within paragraph (a) of any of those sub-paragraphs F143except sub-paragraph (3A) shall be treated as an amount deductible under this Schedule only in so far as the amount of the corresponding under-deduction has not been so treated.
F27This is subject to the following qualification.
F285A
Where a payment—
a
falls within sub-paragraph (4)(e) F82or (f),
b
comprises a beneficial interest in F30securities, or
c
is treated as earnings within the meaning of Part 7 of the Income Tax (Earnings and Pensions) Act 2003,
sub-paragraph (5B) applies.
5B
If this sub-paragraph applies—
a
sub-paragraph (5)(a) shall have effect as if “, but not in excess of,” were omitted; and
b
sub-paragraph (8) shall have effect as if at the end there were added “or the following year”
6
Sub-paragraph (8) applies where an employer makes a payment consisting either soley of non-monetary earnings, or a combination of monetary and non-monetary earnings, to—
a
an employee;
b
an ex-employee,
and at the time of the payment of those earnings there are no, or insufficient, monetary earnings from which the employer could deduct the F132section 6(4)(a) amount.
7
In sub-paragraph (6)(b) “ex-employee” means a person who—
a
ceases to be employed by the employer in a particular year (“the cessation year”); and
b
receives such earnings from the employer after the cessation of employment but in the cessation year.
F1318
Where, in the circumstances specified in sub-paragraph (6), the employer–
a
does not deduct from the earnings referred to in that sub-paragraph the full section 6(4)(a) amount, or
b
is treated as making a payment of F41general earnings by paragraph 4A,
he may recover, in a case falling within paragraph (a) the amount not so deducted or, in a case falling within paragraph (b) the section 6(4)(a) amount, by deduction from any subsequent payment of monetary earnings to that employee, or ex-employee (as the case may be) during the same year.
This sub-paragraph is subject to sub-paragraph (5).
9
Sub-paragraph (11) applies if—
a
a person (“the ex-employee”) ceases in a particular tax year (“the cessation year”) to be employed by a particular employer (“the employer”); and
b
the ex-employee receives from the employer in the cessation year, after the cessation of employment, earnings in the form of—
i
a beneficial interest in F75securities,
ii
iii
any gain on which the ex-employee is chargeable to tax by virtue of F77section 4(4)(a) of the Act; and
c
at the time of the payment of those earnings there are no monetary earnings, or insufficient monetary earnings, from which the employer could deduct the F130section 6(4)(a) amount.
F7810
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F79...
11
Where, in the circumstances specified in sub-paragraph (9), the employer has not deducted, from the earnings referred to in sub-paragraph (9)(b), the full amount of earnings-related contributions which by virtue of this Schedule he is entitled to deduct, he may, without prejudice to sub-paragraph (8) but subject to sub-paragraph (12)(b), recover the amount so under-deducted by deduction from the proceeds of sale of some, or all, of—
a
the F80securities referred to in of sub-paragraph 9(b)(i) and (ii); or
b
the F80securities which form the subject matter of the option referred to in sub-paragraph (9)(b)(iii).
12
For the purposes of sub-paragraph (11)—
a
the whole of the amount under-deducted may be recovered from the proceeds of sale of some, or all, of the F80securities referred to in that sub-paragraph; and
b
the employee’s prior written consent to that sale and the recovery of all or part of the under-deduction from the proceeds thereof, shall be required.
13
Subject to sub-paragraph (14), the employer shall record on the deductions working sheet for that employee the name and national insurance number of the employee, the year to which the working sheet relates, the appropriate category letter in relation to the employee (being the appropriate category letter indicated by the Board) and, in so far as relevant to that category letter, the following particulars regarding every payment of F41general earnings which he makes to the employee namely—
a
the date of payment;
b
the amount of—
i
earnings up to and including the current lower earnings limit where earnings equal or exceed that figure,
F234ii
earnings which exceed the current lower earnings limit but do not exceed the current primary threshold,
F233iii
earnings which exceed the current primary threshold but do not exceed the upper accrual point,
F214iiia
earnings which exceed the upper accrual point but do not exceed the current upper earnings limit,
F16iv
the sum of the primary Class 1 contributions and secondary Class 1 contributions payable on all the employee’s earnings, other than contributions recovered under sub-paragraph (3); and
v
the primary Class 1 contributions payable on the employee’s earnings;
vi
any statutory maternity pay;
F219vii
any ordinary statutory paternity pay;
viia
any additional statutory paternity pay; and
F15viii
any statutory adoption pay.
The amounts to be recorded under sub-paragraphs (iv) and (v) are the amounts of contributions after deducting the amount of any reduction calculated in accordance with section 41(1) to (1B) F232... of the Pensions Act (“the reduction”), subject to the following qualification.
If the amount of the reduction exceeds the amount of the contributions in respect of which it falls to be made, the amount to be entered under sub-paragraph (v) is nil.
F14c
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14
Where 2 or more payments of F41general earnings fall to be aggregated, the employer, instead of recording under heads (iv) and (v) of sub-paragraph (13)(b) separate amounts in respect of each such payment, shall under each head record a single amount, being the total of the contributions appropriate to the description specified in that head, in respect of the aggregated payments.
15
When an employer pays F41general earnings he shall record under the name of the employee to whom he pays the F41general earnings—
a
the date of payment;
c
any allowable F81pension contributions;
and retain the record for a period of three years after the end of the tax year in which the F41general earnings were paid.
F120Records where liability transferred from secondary contributor to employed earner: relevant employment income8
Where an election has been made for the purposes of paragraph 3B(1) of Schedule 1 to the Act (elections about transfer of liability for secondary contributions in respect of relevant employment income), the secondary contributor shall maintain records containing—
a
a copy of any such election;
b
a copy of the notice of approval issued by the Inland Revenue under paragraph 3B(1)(b) of that Schedule;
c
the name and address of the secondary contributor who has entered into the election;
d
the name of the employed earner; and
e
the national insurance number allocated to the employed earner.
Certificate of contributions paid9
1
Where the employer is required to give the employee a certificate in accordance with F62regulation 67 of the PAYE Regulations (information to employees about payments and tax deducted (Form P 60)), the employer shall enter on the certificate, in respect of the year to which the certificate relates—
a
the amount of any earnings up to and including the current lower earnings limit where earnings equal or exceed that figure;
b
the amount of any earnings in respect of which primary Class 1 contributions were, by virtue of section 6A of the ActF5, treated as having been paid, which exceed the current lower earnings limit but do not exceed the current primary threshold, other than earnings from non-contracted-out employment in respect of which primary Class 1 contributions were, by virtue of that section and regulation 127, treated as having been paid at the reduced rate;
c
the amount of any earnings in respect of which primary Class 1 contributions were payable which exceed the current primary threshold but do not exceed the F215upper accrual point, other than earnings from non-contracted-out employment in respect of which primary Class 1 contributions were payable at the reduced rate;
F216ca
the amount of any earnings in respect of which primary Class 1 contributions were payable which exceed the upper accrual point but do not exceed the current upper earnings limit, other than earnings from non-contracted-out employment in respect of which primary Class 1 contributions were payable at the reduced rate;
d
the amount of the earnings, if any, recorded under paragraphs (b) and (c), above the current lower earnings limit, in respect of which primary Class 1 contributions were payable or, where section 6A of the Act and regulation 127 applies, were treated as having been paid, at the reduced rate;
e
the amount of primary Class 1 contributions paid by the employee;
F17f
the amount of statutory maternity pay paid to the employee;
F220g
the amount of ordinary statutory paternity pay paid to the employee;
ga
the amount of additional statutory paternity pay paid to the employee; and
h
the amount of statutory adoption pay paid to the employee;
2
a
has paid, or
b
is treated, by virtue of section 6A of the Act, as having paid,
primary Class 1 contributions in that year, the employer shall nevertheless give the employee such a certificate showing the information referred to in sub-paragraph (1).
F2363
In sub-paragraph (2), “relevant payments” has the meaning given in the PAYE Regulations.
PART III PAYMENT AND RECOVERY OR EARNINGS-RELATED CONTRIBUTIONS, CLASS 1A CONTRIBUTIONS AND CLASS 1B CONTRIBUTIONS, ETC.
Payment of earnings-related contributions monthly by employer10
1
Subject to F144sub-paragraph (1A) and paragraph 11 and 15(8), the employer shall pay the amount specified in sub-paragraph (2) to the F83Inland Revenue within 14 days F84or, if payment is made by an approved method of electronic communications in respect of earnings paid after 5th April 2004, within 17 days of the end of every F85... tax month.
F1451A
This paragraph does not apply in respect of amounts of retrospective earnings.
2
The amount specified in this sub-paragraph is the total amount of earnings-related contributions due in respect of F43general earnings paid by the employer in that F44... tax month, F237(and, where required, reported under paragraph 21A or 21D) other than amounts deductible under paragraph 7(2) which he did not deduct and amounts which he deducted under the Compensation of Employers RegulationsF239....
3
For the purposes of sub-paragraph (2), if two or more payments of F86general earnings fall to be aggregated, the employer shall be treated as having deducted from the last of those payments the amount of any earnings-related contributions deductible from those payments which he did not deduct from the earlier payments.
F2383A
The amount specified in sub-paragraph (2) must be adjusted to take account of errors corrected under paragraph 21E(5), other than in cases where paragraph 21E(4) appliesF265, or failures rectified under paragraph 21EA(2).
Payments of earnings-related contributions quarterly by employer11
1
Subject to F146sub-paragraph (1A) and paragraph 15(8), the employer shall pay the amount specified in sub-paragraph (2) to the F87Inland Revenue within 14 days of the end of every F88... tax quarter F89or, if payment is made by an approved method of electronic communications in respect of earnings paid after 5th April 2004, within 17 days of the end of every tax quarter where—
a
the employer has reasonable grounds for believing that the condition specified in sub-paragraph (4) applies and chooses to pay the amount specified in sub-paragraph (2) quarterly; or
F90b
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1471A
This paragraph does not apply in respect of amounts of retrospective earnings.
2
The amount specified in this sub-paragraph is the total amount of earnings-related contributions due in respect of F45general earnings paid by the employer in that F46... tax quarter, F241(and, where required, reported under paragraph 21A or 21D)
other than amounts deductible under paragraph 7(2) which he did not deduct and amounts which he deducted under the Compensation of Employers RegulationsF244....
3
For the purposes of sub-paragraph (2), where two or more payments F91of general earnings fall to be aggregated, the employer shall be deemed to have deducted from the last of those payments the amount of any earnings-related contributions deductible from those payments which he did not deduct from the earlier payments.
F2403A
The amount specified in sub-paragraph (2) must be adjusted to take account of errors corrected under paragraph 21E(5), other than in cases where paragraph 21E(4) appliesF266, or failures rectified under paragraph 21EA(2).
F134
The condition specified in this sub-paragraph is that for F47tax months falling within the current year, the average monthly amount found by the formula below will be less than £1500.
The formula is—
F134(N + P + L + S) − (SP + CD)
The expressions used in the formula have the following values.
N is the amount which would be payable to the F48Inland Revenue under the Social Security Contributions and Benefits Act 1992 and these Regulations but disregarding—
- a
any amount of secondary Class 1 contributions in respect of which liability has been transferred to the employed earner by an election made jointly by the employed earner and the secondary contributor for the purpose of paragraph 3B(1) of Schedule 1 to the Act (transfer of liability to be borne by the earner); and
- aa
F148any amount payable in respect of retrospective earnings;
- c
F137...
- a
F149“P” is the amount which would be payable to HMRC under regulation F242 67G or 68 of the PAYE Regulations but disregarding any amount payable in respect of retrospective employment income (within the meaning of regulation 2 of those Regulations);
L is the amount which would be payable to the F48Inland Revenue under
F243regulation 54(1) of the Education (Student Loans) (Repayment) Regulations 2009 (payment of repayments deducted to HMRC)
if the reduction referred to in paragraph (3) of that regulation F135...were disregarded.S is the sum of the amounts which the employer would be liable to deduct, under section 559 of the Taxes Act and the Income Tax (Sub-contractors in the Construction Industry) Regulations 1993, from payments made by him.
F136...
SP is the amount—
- a
recoverable by the employer from F49the Inland Revenue, or
- b
deductible from amounts for which the employer would otherwise be accountable to F49the Inland Revenue,
in respect of payments to his employees by way of statutory sick pay, statutory maternity pay, F221ordinary statutory paternity pay, additional statutory paternity pay and statutory adoption pay.
- a
CD is the amount which would be deducted by others from sums due to the employer, in his position as a sub-contractor, under section 559 of the Taxes Act.
F227Payments to and recoveries from HMRC for each tax period by Real Time Information employers: returns under paragraph 21E(6) F269or 21EA(3)11ZA
1
This paragraph applies if, during any tax period, an employer makes a return under paragraph 21E(6) (returns under paragraph 21A and 21D: amendments) other than by virtue of paragraph 21E(4)F268, or paragraph 21EA(3) (failure to make a return under paragraph 21A or 21D of Schedule 4).
2
The amount specified in paragraph 10(2) or, as the case may be, 11(2) for the final tax period in the year covered by the return is to be adjusted to take account of the information in the return.
3
If the value of the adjustment required by paragraph (2) is a negative amount, the employer may recover that amount—
a
by setting it off against the amount the employer is liable to pay under paragraph 10(2) or, as the case may be, 11(2) for the tax period the return is made in; or
b
from the Commissioners for Her Majesty's Revenue and Customs.
4
But paragraph (3) does not apply in relation to primary Class 1 contributions in a case where those contributions were deducted in error and the excess deduction has not been refunded to the employee.
F138Payments of earnings-related contributions in respect of retrospective earnings11A
1
This paragraph applies where there are retrospective earnings in respect of which contributions (whether primary or secondary contributions) are payable.
2
The employer shall pay the contributions referred to in sub-paragraph (1) to HMRC within 14 days or, if payment is made in respect of the current year by an approved method of electronic communications, 17 days of the end of the tax month immediately following the tax month in which the relevant retrospective contributions regulations came into force.
Payment of earnings-related contributions by employer (further provisions)12
F921
The Inland Revenue shall give a receipt to the employer for the total amount paid under paragraph F15010, 11 or 11A if so requested, but if a receipt is given for the total amount of earnings-related contributions and any tax paid at the same time, a separate receipt need not be given for earnings-related contributions.
2
Subject to sub-paragraph (3), if the employer has paid to the F93Inland Revenue on account of earnings-related contributions under paragraph F15010, 11 or 11A an amount which he was not liable to pay, or which has been refunded in accordance with regulation 2 of the Social Security (Refunds) (Repayment of Contractual Maternity Pay) Regulations 1990 (refunds of contributions)F6, the amounts which he is liable to pay subsequently in respect of other payments of F94general earnings made by him during the same year shall be reduced by the amount overpaid, so however that if there was a corresponding over-deduction from any payment of F94general earnings to an employee, this paragraph shall apply only in so far as the employer has reimbursed the employee for that over-deduction.
3
Sub-paragraph (2) applies only if—
a
the over-deduction occurred by reason of an error by the employer in good faith;
b
the over-deduction occurred as a result of the employment in respect of which the payment on account of earnings-related contributions is made being or, as the case may be, becoming contracted-out employment; or
c
a refund has been made under regulation 2 of the Social Security (Refunds) (Repayment of Contractual Maternity Pay) Regulations 1990.
Payment of Class 1B contributions13
1
A person who is liable to pay a Class 1B contribution (“the employer”), shall pay that Class 1B contribution to the F95Inland Revenue not later than 19th October F96or, if payment is made by an approved method of electronic communications in respect of earnings paid after 5th April 2004, not later than 22nd October in the year immediately following the end of the year in respect of which that contribution is payable.
2
If the employer has paid to the F95Inland Revenue under this paragraph an amount in respect of Class 1B contributions which he was not liable to pay, he shall be entitled to deduct the amount overpaid from any payment in respect of secondary earnings-related contributions which he is liable to pay subsequently to the F95Inland Revenue under paragraph 10 or 11 for any F97... tax period in the same year.
Employer failing to pay earnings-related contributions14
1
If within F5017 days of the end of any F52... tax period F245a non-Real Time Information employer
has paid no amount of earnings-related contributions to the F51Inland Revenue under paragraph 10 or 11 for that F52... tax period and the F51Inland Revenue is unaware of the amount, if any, which the employer is liable so to pay, the F51Inland Revenue may give notice to the employer requiring him to render, within 14 days, a return in the prescribed form showing the amount of earnings-related contributions which the employer is liable to pay to the F51Inland Revenue under that paragraph in respect of the F52... tax period in question.
2
3
If the F51Inland Revenue is not satisfied that an amount of earnings-related contributions paid F98... under paragraph 10 or 11 for any F52... tax period is the full amount which the employer is liable to payF98..., the F51Inland Revenue may give a notice under sub-paragraph (1) despite the payment of that amount.
Specified amount of earnings-related contributions payable by the employer15
1
If after F6417 days following the end of any F53... tax period the employer has paid no amount of earnings-related contributions to F173HMRC under paragraph 10 or 11 for that F53... tax period and there is reason to believe that the employer is liable to pay such contributions, F173HMRC, upon consideration of the employer’s record of past payments F174whether of earnings-related contributions or of combined amounts, may to the best of F65their judgment specify the amount of earnings-related contributions F175or of a combined amount which F66they consider the employer is liable to pay and give notice to him of that amount.
F1691A
For the purposes of this paragraph “combined amount” is an amount which includes earnings-related contributions due under these regulations and one or more of the following—
a
tax due under the PAYE Regulations;
b
amounts due under the Income Tax (Construction Industry Scheme) Regulations 2005;
c
payments of repayments of student loans due under the F247Education (Student Loans) (Repayment) Regulations 2009.
F2461B
In arriving at an amount under paragraph (1), HMRC may also take into account any returns made by the employer under this Schedule in the tax period in question or earlier tax periods.
2
If, on the expiration of the period of 7 days allowed in the notice, the specified amount F176... or any part thereof is unpaid, the amount so unpaid—
a
b
may be certified by F178HMRC.
3
The provisions of sub-paragraph (2) shall not apply if, during the period allowed in the notice, the employer pays to F179HMRC the full amount of earnings-related contributions which the employer is liable to pay under paragraph 10 or 11 for that F53... tax period, or the employer satisfies F179HMRC that no amount of such contributions is due.
4
The production of a certificate such as is mentioned in sub-paragraph (2) shall, until the contrary is established, be sufficient evidence that the employer is liable to pay to F180HMRC the amount shown in it; and any document purporting to be such a certificate as aforesaid shall be deemed to be such a certificate until the contrary is proved.
Paragraph 16 shall apply, with any necessary modifications, to the amount shown in the certificate.
5
Where the employer has paid no amount of earnings-related contributions under paragraph 10 or 11 for any F53... tax periods, a notice may be given by F181HMRC under sub-paragraph (1) which extends to two or more consecutive F53... tax periods, and this Schedule shall have effect as if those F53... tax periods were the latest F53... tax period specified in the notice.
6
A notice may be given by F182HMRC under sub-paragraph (1) notwithstanding that an amount of earnings-related contributions has been paid F67... by the employer under paragraph 10 or 11 for any F53... tax period, if, after seeking the employer’s explanation as to the amount of earnings-related contributions paid, F182HMRC is not satisfied that the amount so paid is the full amount which the employer is liable to pay F67... for that period, and this paragraph shall have effect accordingly, save that sub-paragraph (2) shall not apply if, during the period allowed in the notice, the employer satisfies F182HMRC that no further amount of earnings-related contributions is due for the relevant F53... tax period.
7
Where, during the period allowed in a notice given by F170HMRC under sub-paragraph (1), the employer claims, but does not satisfy F170HMRC, that the payment F171... made in respect of any F53... tax period specified in the notice is F172or includes the full amount of earnings-related contributions he is liable to pay to F170HMRC for that period, the employer may require F170HMRC to inspect the employer’s documents and records as if F170HMRC had called upon the employer to produce those documents and records in accordance with F201Schedule 36 to the Finance Act 2008 (information and inspection powers) and the provisions of paragraph 26A shall apply in relation to that inspection, and the notice given by F170HMRC under sub-paragraph (1) shall be disregarded in relation to any subsequent time.
8
Notwithstanding anything in this paragraph, if the employer pays any amount of earnings-related contributions certified by F183HMRC under it F184whether separately or as part of a combined amount and that amount exceeds the amount which he would have been liable to pay in respect of that F53... tax period apart from this paragraph, he shall be entitled to set off such excess against any amount which he is liable to pay to F183HMRC under paragraph 10 or 11 for any subsequent F53... tax period.
9
If, after the end of the year, the employer renders the return required by paragraph 22(1) and the total earnings-related contributions he has paid in respect of that year in accordance with this Schedule exceeds the total amount of such contributions due for that year, any excess not otherwise recovered by set-off shall be repaid.
Recovery of earnings-related contributions or Class 1B contributions16
1
The F54... Tax Acts and any regulations underF7F68section 684 of ITEPA 2003 (PAYE regulations) relating to the recovery of tax shall apply to the recovery of—
a
any amount of earnings-related contributions which an employer is liable to pay F191HMRC for any F54... tax period in accordance with paragraph 10 or 11 or which he is treated as liable to F191HMRCF187whether separately or as part of a combined amount for any F54... tax period under paragraph 15; or
b
any amount of Class 1B contributions which an employer is liable to pay to the F191HMRC in respect of any year in accordance with paragraph 13(1),
as if each of those amounts had been charged to tax by way of an assessment on the employer F69as employment income under ITEPA 2003.
2
Sub-paragraph (1) is subject to the qualification that, in the application to any proceedings taken, by virtue of this paragraph, of any of the relevant provisions limiting the amount which is recoverable in those proceedings, there shall be disregarded any F188other component of a combined amount which may, by virtue of sub-paragraphs (3) to (5), be included as part of the cause of action or matter of complaint in those proceedings.
3
Proceedings may be brought for the recovery of the total amount of—
a
b
Class 1B contributions which the employer is liable to pay to F195HMRC in respect of any year;
c
a combination of those classes of contributions as specified in heads (a) and (b); or
d
without specifying the respective amount of those contributions and of F190other component of a combined amount, or distinguishing the amounts which the employer is liable to pay in respect of each employee and without specifying the employees in question.
4
For the purposes of—
a
proceedings under section 66 of the Taxes Management Act 1970 F8 (including proceedings under that section as applied by the provisions of this paragraph);
b
summary proceedings (including in Scotland proceedings in the sheriff court or in the sheriff’s small debt court),
5
Nothing in sub-paragraph (3) or (4) shall prevent the bringing of separate proceedings for the recovery of each of the several amounts of—
a
earnings-related contributions which the employer is liable to pay for any F54... tax period in respect of each of his several employees;
b
Class 1B contributions which the employer is liable to pay in respect of any year in respect of each of his several employees; F192...
c
tax which the employer is liable to pay for any F54... tax period in respect of each of his several employees.
F186d
amounts due under the Income Tax (Construction Industry Scheme) Regulations 2005; or
e
payments of repayments of student loans due under the F248Education (Student Loans) (Repayment) Regulations 2009.
F1856
For the purposes of this paragraph “combined amount” has the meaning given in paragraph 15(1A).
Interest on overdue earnings-related contributions or Class 1B contributions17
1
F100Subject to F151sub-paragraph (4A) and paragraph 21, where, in relation to the year ended 5th April 1993 or any subsequent year, an employer has not—
a
within 14 days F101or, if payment is made by an approved method of electronic communications in respect of earnings paid after 5th April 2004, 17 days of the end of the year paid an earnings-related contribution which he is liable to pay in respect of that year; or
b
paid a Class 1B contribution by 19th October F102or, if payment is made by an approved method of electronic communications in respect of earnings paid after 5th April 2004, not later than 22nd October next following the year in respect of which it was due,
any contribution not so paid shall carry interest at the rate applicable under paragraph 6(3) of Schedule 1 to the Act from the reckonable date until payment.
2
Interest payable under this paragraph shall be recoverable as if it were an earnings-related contribution or a Class 1B contribution, as the case may be, in respect of which an employer is liable under paragraph 10, 11, or 13 to pay to F196HMRC.
3
For the purposes of this paragraph—
a
“employer” means, in relation to a Class 1B contribution, the person liable to pay such a contribution in accordance with section 10A of the ActF9;
b
“the reckonable date” means, in relation to—
i
an earnings-related contribution, the 14th day F103or, if payment was made by an approved method of electronic communications in respect of earnings paid after 5th April 2004, the 17th day after the end of the year in respect of which it was due;
ii
a Class 1B contribution, the 19th October F104or, if payment was made by an approved method of electronic communications in respect of earnings paid after 5th April 2004, the 22nd October next following the year in respect of which it was due.
F152iii
a contribution payable in respect of retrospective earnings relating to a tax year which is closed at the time that the relevant retrospective contributions regulations come into force, the 14th day after the end of the tax month immediately following the tax month in which those regulations came into force.
4
A contribution to which sub-paragraph (1) applies shall carry interest from the reckonable date even if the date is a non-business day within the meaning of section 92 of the Bills of Exchange Act 1882F10.
F1534A
Where an employer has not paid contributions in respect of retrospective earnings relating to a closed tax year by the date set out in paragraph 11A, any contribution not so paid shall carry interest at the rate applicable under paragraph 6(3) of Schedule 1 to the Act from the reckonable date until payment.
F705
A certificate of F197HMRC that, to the best of their knowledge and belief, any amount of interest payable under this paragraph has not been paid by an employer or employee is sufficient evidence that the amount mentioned in the certificate is unpaid and due to be paid, and any document purporting to be such a certificate shall be presumed to be a certificate until the contrary is proved.
F1986
HMRC may prepare a certificate certifying the total amount of interest payable in respect of the whole or any component of a combined amount without specifying what component of the combined amount the interest relates to.
Sub-paragraph (5) shall apply, with any necessary modifications, to the certificate.
7
For the purposes of this paragraph “combined amount” has the meaning given in paragraph 15(1A).
F32Application of paragraphs 16 and 17 in cases of wilful failure to pay17A
1
If regulation 86(1)(a) applies paragraphs 16 and 17 shall apply to the employed earner to the extent of the primary contribution which the secondary contributor wilfully failed to pay.
2
For the purpose of sub-paragraph (1) any reference in paragraph 16 and 17 to an employer shall be construed as a reference to the employed earner.
Payment of interest on repaid earnings-related contributions or Class 1B contributions18
1
Where an earnings-related contribution paid by an employer in respect of the year ended 5th April 1993 or any subsequent year not later than the year ended 5th April 1999 is repaid to him and that repayment is made after the relevant date, any such repaid contribution shall carry interest at the rate applicable under paragraph 6(3) of Schedule 1 to the Act from the relevant date until the order for the repayment is issued.
2
For the purposes of sub-paragraph (1) “the relevant date” is—
a
in the case of an earnings-related contribution overpaid more than 12 months after the end of the year in respect of which the payment was made, the last day of the year in which it was paid; and
b
in any other case, the last day of the year after the year in respect of which the contribution in question was paid.
3
Where an earnings-related contribution or a Class 1B contribution paid by an employer in respect of the year ended 5th April 2000 or any subsequent year is repaid to him and that repayment is made after the relevant date, any such repaid contribution shall carry interest at the rate applicable under paragraph 6(3) of Schedule 1 to the Act from the relevant date until the order for the repayment is issued.
4
For the purpose of sub-paragraph (3) “the relevant date” is—
a
in the case of—
i
an earnings-related contribution, the 14th day after the end of the year in respect of which that contribution was paid; or
ii
a Class 1B contribution, the 19th October next following the year in respect of which that contribution was paid; or
b
the date on which the earnings-related contribution or Class 1B contribution was paid if that date is later than the date referred to in paragraph (a).
Repayment of interest19
Where a secondary contributor or a person liable to pay a Class 1B contribution has paid interest on an earnings-related contribution or a Class 1B contribution, that interest shall be repaid to him F154if—
a
the interest paid is found not to have been due to be paid, although the contribution in respect of which it was paid was due to be paid;
b
the earnings-related contribution or Class 1B contribution in respect of which interest was paid is returned or repaid to him in accordance with the provisions of regulation F9952, 52A or 55.
Remission of interest for official error20
1
Where interest is payable in accordance with paragraph 17 it shall be remitted for the period commencing on the first relevant date and ending on the second relevant date in the circumstances specified in sub-paragraph (2).
2
For the purposes of sub-paragraph (1), the circumstances are that the liability, or a greater liability, to pay interest in respect of an earnings-related contribution or a Class 1B contribution arises as the result of an official error being made.
3
In this paragraph—
a
“an official error” means a mistake made, or something omitted to be done, by an officer of the Board, where the employer or any person acting on his behalf has not caused, or materially contributed to, that mistake or omission;
b
“the first relevant date” means the reckonable date as defined in paragraph 17(3) or, if later, the date on which the official error occurs;
c
“the second relevant date” means the date 14 days after the date on which the official error has been rectified and the employer is advised of its rectification.
Application of paragraphs 10, 12, 16, 17, 18, 19 and 2021
1
This paragraph applies where—
a
secondary Class 1 contributions are payable in respect of F123relevant employment income; and
b
an amount or proportion (as the case may be) of the liability of the secondary contributor to those contributions is transferred to the employed earner by an election made jointly by them for the purposes of paragraph 3B(1) of Schedule 1 to the ActF11.
2
Paragraphs 10, 12, 16, 17, 18, 19 and 20 shall apply to the employed earner to the extent of the liability transferred by the election and, to that extent, those paragraphs shall not apply to the employer.
3
For the purposes of sub-paragraph (2)—
a
any reference in paragraphs 10, 12, 16, 17, 18 and 20 to an employer; and
b
the reference in paragraph 19 to a secondary contributor,
shall be construed as a reference to the employed earner to whom the liability is transferred by the election.
F226Real time returns of information about payments of general earnings21A
1
F292Subject to sub-paragraphs (1A) and (1B), on or before making any payment of general earnings to an employee a Real Time Information employer must deliver to HMRC the information specified in Schedule 4A (real time returns) in accordance with this paragraph F270unless—
a
the employer is not required to maintain a deductions working sheet for any employees, or
b
an employee’s earnings are below the lower earnings limit and the employer is required to make a return under regulation 67B(1), regulation 67D(3), regulation 67E(6) or regulation 67EA(3) of the PAYE Regulations.
F2931A
In the period from 6th October 2013 to 5th April 2014 a Real Time Information employer who on 6th October 2013 employs no more than 49 employees may proceed in accordance with sub-paragraph (1B).
1B
A Real Time Information employer within sub-paragraph (1A) must deliver to HMRC the information specified in Schedule 4A by the last day of the tax month in which the payment of general earnings is made unless the employer is not required to maintain a deductions working sheet for any employees.
2
The information must be included in a return.
3
Subject to paragraph (4), if payments of general earnings are made to more than one employee at the same time, the return under sub-paragraph (2) must include the information required by Schedule 4A in respect of each employee to whom a payment of general earnings is made at that time.
4
If payments of general earnings are made to more than one employee at the same time but the employer operates more than one payroll, the employer must make a return in respect of each payroll.
5
The return is to be made using an approved method of electronic communications and regulation 90N(2) (mandatory use of electronic communications) applies as if the return was a paragraph 22 return within the meaning given by regulation 90M (paragraph 22 return and specified payments).
F2716
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F2717
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8
Schedule 24 to the Finance Act 2007 (penalties for errors), as that Schedule applies to income tax returns, shall apply in relation to the requirement to make a return contained in sub-paragraph (2).
F262Employees in respect of whom employer is not required to maintain a deductions worksheet21AA
1
This paragraph applies if an employer makes a payment of general earnings to an employee in respect of whom the employer is not required to maintain a deductions working sheet.
2
The employer need not deliver the information required by paragraph 21A in respect of that employee on or before making the payment.
3
The employer must deliver that information no later than the end of the period of 7 days starting with the day following the day on which the payment is made.
Employees paid in specified circumstances21AB
1
This paragraph applies if—
a
an employer makes a payment of general earnings to an employee, and
b
all of the circumstances in sub-paragraph (2) apply.
2
The circumstances are that—
a
the payment includes an amount of general earnings which is for work undertaken by the employee on—
i
the day the payment is made, or
ii
provided that the payment is made before the employee leaves the place of work at the end of the employee’s period of work, the day before the payment is made,
b
in respect of the work mentioned in paragraph (a), it was not reasonably practicable for the employer to calculate the payment due before the completion of the work, and
c
it is not reasonably practicable for the employer to deliver the information required by paragraph 21A on or before making the payment.
3
The employer need not deliver the information required by paragraph 21A on or before making the payment.
4
The employer must deliver that information no later than the end of the period of 7 days starting with the day following the day on which the payment is made.
Paragraphs 21AA and 21AB: supplementary21AC
Where paragraph 21AA or 21AB applies, the information required by paragraph 21A in respect of the payment of general earnings may be included in a return with the information for any other payment of general earnings.
Benefits and expenses – returns under regulations 85 to 87 of the PAYE Regulations21AD
1
This paragraph applies if an employer makes a payment of general earnings to an employee which, for the purposes of tax, falls to be included in a return under—
a
regulations 85 and 86 of the PAYE Regulations (employers: annual return of other earnings (Forms P11D and P9D) – information which must be provided for each employee), or
b
regulations 85 and 87 of the PAYE Regulations (employers: annual return of other earnings (Forms P11D and P9D) – information which must also be provided for benefits code employees) or would fall to be so included if the employee’s employment was subject to the benefits code for the purposes of regulation 85 of the PAYE Regulations.
2
If the employer is unable to comply with the requirement in paragraph 21A(1) to deliver the information required by that paragraph on or before making the payment, the employer must instead deliver the information as soon as reasonably practicable after the payment is made and in any event no later than 14 days after the end of the tax month in which the payment is made.
F226Modification of the requirements of paragraph 21A: notional payments21B
1
This F272paragraph applies if an employer makes a payment of general earnings to an employee which, for the purposes of tax, is a notional payment within the meaning given by section 710(2) of ITEPA 2003 (including a notional payment arising by virtue of a retrospective tax provision).
2
If the employer is unable to comply with the requirement in paragraph 21A(1) to deliver the information required by that paragraph on or before making the payment, the employer must instead deliver the information as soon as reasonably practicable after the payment is made and in any event no later than—
a
the time at which the employer delivers the information required by regulation 67B of the PAYE Regulations (real time returns of information about relevant payments) in respect of the payment;
F273b
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ; or
c
14 days after the end of the tax month the payment is made in,
whichever is earliest.
F226Relationship between paragraph 21A and aggregation of earnings21C
1
Where an employee's earnings are aggregated, a Real Time Information employer or, as the case may be, Real Time Information employers must make such arrangements as are necessary to ensure that the information specified in paragraph (2) in respect of all the aggregated earnings is included in the information given in respect of one of the employee's employments only.
2
The information specified in this paragraph is the information specified in paragraphs 7 and 10(b) and (d) of Schedule 4A (real time returns).
F263Notifications of payments of general earnings to and by providers of certain electronic payment methods21CA
1
A Real Time Information employer who makes a payment of general earnings using an approved method of electronic communications which falls to be included in a return under paragraph 21A must—
a
generate a reference and include it in that return,
b
notify the service provider that the payment is a payment of general earnings, and
c
generate a sub-reference in respect of the payment of general earnings and notify the service provider of that sub-reference.
2
A service provider who receives a notification under paragraph (1)(b) must notify HMRC of the information it holds that is required for generating a reference in relation to the payment of general earnings.
3
In sub-paragraphs (1) and (2), “service provider” means the provider of the approved method of electronic communications by which the payment is made.
4
For the purposes of sub-paragraphs (1) and (3), an “approved method of electronic communications” is any method of electronic communications which has been approved for the purposes of regulation 90H (mandatory electronic payment).
5
Any direction given under regulation 67CA of the PAYE Regulations (notification of relevant payments to and by providers of certain electronic payment methods) applies for the purposes of the obligations in this paragraph as if it referred to payments of general earnings.
F226Exceptions to paragraph 21A21D
1
This paragraph applies to—
a
an individual who is a practising member of a religious society or order whose beliefs are incompatible with the use of electronic communications;
b
a partnership, if all the partners fall within sub-paragraph (a);
c
a company, if all the directors and the company secretary fall within sub-paragraph (a);
d
a care and support employer.
F276e
an employer to whom a direction has been given under sub-paragraph (12).
2
A Real Time Information employer to whom this paragraph applies may proceed in accordance with this paragraph instead of paragraph 21A.
F2742A
Before 6th April 2014, a Real Time Information employer to whom this paragraph applies may proceed as if the employer were a non-Real Time Information employer and accordingly the provisions of this Schedule apply to such an employer.
3
F277On and after 6th April 2014, the Real Time Information employer must deliver to HMRC the information specified in Schedule 4A in respect of each employee to whom a payment of general earnings is made in a tax month unless the employer is not required to maintain a deductions working sheet for any employees and, for the purposes of this paragraph, references in Schedule 4A to a payment of general earnings shall be read as if they were references to all the payments made to the employee in the tax month.
4
The information must be included in a return in such a form as HMRC may approve or prescribe.
5
The return required under sub-paragraph (4) must be delivered within 14 days after the end of the tax month the return relates to.
6
If payments of general earnings have been made to more than one employee in the tax month, the return under sub-paragraph (4) must include the information required by Schedule 4A in respect of each employee to whom a payment of general earnings has been made.
F2787
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F2788
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9
Schedule 24 to the Finance Act 2007, as that Schedule applies to income tax returns, shall apply in relation to the requirement to make a return contained in sub-paragraph (4).
10
In sub-paragraph (1)(c), “company” means a body corporate or unincorporated association but does not include a partnership.
11
In sub-paragraph (1)(d), “care and support employer” means an individual (“the employer”) who employs a person to provide domestic or personal services at or from the employer's home where—
a
the services are provided to the employer or a member of the employer's family;
b
the recipient of the services has a physical or mental disability, or is elderly or infirm; and
c
it is the employer who delivers the return (and not some other person on the employer's behalf).
F27512
Where the Commissioners for Her Majesty’s Revenue and Customs are satisfied that—
a
it is not reasonably practicable for an employer to make a return using an approved method of electronic communications, and
b
it is the employer who delivers the return (and not some other person on the employer’s behalf),
they may make a direction specifying that the employer is not required to make a return using an approved method of electronic communications.
F226Returns under paragraphs 21A and 21D: amendments21E
1
This paragraph applies where an employer discovers an error in a return made under paragraph 21A (real time returns of information about payments of general earnings) or 21D (exceptions to paragraph 21A) and sub-paragraph (2), (3) or (4) applies.
2
This sub-paragraph applies where the error relates to the information given in the return in respect of an employee under F279one or more of paragraphs 3A, 7, 10(b), 10(d), 13, 14, 15, 16 or 18 of Schedule 4A (real time returns).
3
This sub-paragraph applies where the error was the omission of details of a payment of general earnings to an employee.
4
This sub-paragraph applies where retrospective earnings increase the total amount of the general earnings paid to the employee for any tax year in which the employer was a Real Time Information employer.
5
The employer must provide the correct information in the first return made after the discovery of the error under paragraph 21A or 21D for the tax year in question.
6
But if the information given has not been corrected before 20th April following the end of the tax year in question, the employer must make a return under this sub-paragraph.
7
A return under sub-paragraph (6)—
a
must include the following—
i
the information specified in paragraphs F2802 to 7 and 10 to 12 of Schedule 4A,
F281ii
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
iii
the value of the adjustment, if any, to the information given under each of the paragraphs of Schedule 4A referred to in sub-paragraph (2) in the final return under paragraph 21A or 21D containing information in respect of the employee in the tax year in question,
iv
if an adjustment is made to the information given under paragraph 7 or 10(b) or (d) of Schedule 4A, the information specified in paragraph 6 of that Schedule,
v
if an adjustment is made to the information given under paragraph 10(d) of Schedule 4A that decreases the amount reported under that paragraph, an indication of whether the employer has refunded the primary Class 1 contributions paid in error to the employee, and
vi
if an adjustment is made to the information given under paragraph 16 of Schedule 4A, the information specified in paragraph 17 of that Schedule if it has not already been provided;
b
must be made as soon as reasonably practicable after the discovery of the error; and
c
must be made using an approved method of electronic communications F282and regulation 90N(2) (mandatory use of electronic communications) applies as if the return was a paragraph 22 return within the meaning given by regulation 90M (paragraph 22 return and specified payments).
8
In the application of sub-paragraphs (6) and (7) to cases within sub-paragraph (3), if no information was given in any returns under paragraph 21A or 21D in respect of the employee in the tax year, the value of any adjustments required must be calculated as if there was a final return containing information for the employee in the year and the figure requiring adjustment was zero.
9
Sub-paragraph (7)(c) does not apply if the employer is one to whom paragraph 21D applies but in those circumstances the return must be in such a form as HMRC may approve or prescribe.
F264Failure to make a return under paragraph 21A or 21D21EA
1
This paragraph applies where an employer does not make a return required by paragraph 21A (real time returns of information about payments of general earnings) or 21D (exceptions to paragraph 21A).
2
The employer must provide the information in the next return made under paragraph 21A or 21D for the tax year in question.
3
But if the information has not been provided before 20th April following the end of the tax year in question, the employer must submit a return under this sub-paragraphF294....
4
A return under sub-paragraph (3) must—
a
include the information specified in Schedule 4A,
b
be made as soon as reasonably practicable after the discovery of the failure to make the return, and
c
be made using an approved method of electronic communications and regulation 90N(2) (mandatory use of electronic communications) applies as if the return were a paragraph 22 return within the meaning given by regulation 90M (paragraph 22 return and specified payments).
5
Sub-paragraph (4)(c) does not apply if the employer is one to whom paragraph 21D applies but in those circumstances the return must be in such a form as HMRC may approve or prescribe.
6
F226Additional information about payments21F
1
A Real Time Information employer must inform HMRC of each of the amounts specified in Schedule 4B (additional information about payments) for each tax period unless sub-paragraph (4) or (5) applies.
2
The information must be given in a return.
3
The return must be delivered within 14 days after the end of the tax period.
4
This sub-paragraph applies if—
a
all of the amounts are zero; and
b
the employer has not made a return under sub-paragraph (2) in the tax year.
5
This paragraph applies if none of the amounts has changed in the tax period.
6
If an employer makes an error in a return under this paragraph, the employer must provide the correct information in the first return made under sub-paragraph (2) after the discovery of the error.
7
But if the information given has not been corrected before 20th April following the end of the year in question, the employer must provide the correct information for the year in question in a return under this sub-paragraph.
F2837A
A Real Time Information employer may send to HMRC a notification (included within a return under this paragraph or otherwise) if—
a
for a tax period, the employer was not required to make any returns in accordance with paragraph 21A or 21D because no payments of general earnings were made during the tax periods, or
b
the employer has sent the final return under paragraph 21A or 21D that the employer expects to make—
i
in the circumstances described in paragraph 5 of Schedule A1 to the PAYE Regulations (real time returns); or
ii
for the year.
8
A return under sub-paragraph (2) or (7) F284and a notification under paragraph (7A)—
a
must state—
i
the year to which the return relates,
ii
the employer's HMRC office number,
iii
the employer's PAYE reference, F285...
iv
the employer's accounts office referenceF286, and;
v
if the notification is under sub-paragraph (7A)(b)(i), include the date of cessation;
b
is to be made using an approved method of electronic communications.
F2889
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10
For the purposes of sub-paragraph (8)(b), regulation 90N(2) (mandatory use of electronic communications) applies as if the return was a paragraph 22 return within the meaning given by regulation 90M (paragraph 22 return and specified payments).
11
The requirement to use an approved method of electronic communications does not apply if the employer is one to whom paragraph 21D (exceptions to paragraph 21A) applies but in those circumstances the return must be in such a form as HMRC may approve or prescribe.
12
Schedule 24 to the Finance Act 2007 (penalties for errors), as that Schedule applies to income tax returns, shall apply in relation to the requirement to make a return contained in sub-paragraph (2) or (7).
Return by employer at end of year22
F249A1
This F287paragraph applies to—
a
non-Real Time Information employers;
b
Real Time Information employers in relation to years in which they were, for the whole of the year, non-Real Time information employers; and
c
Real Time Information employers to whom HMRC has given a notice requiring a return under regulation 73 of the PAYE Regulations (annual return of relevant payments liable to deduction of tax (Forms P35 and P14) in respect of a tax year.
1
F55Before 20th May following the end of the year the employer shall render to F155HMRC in such form as they may approve or prescribe, a return showing in respect of each employee, in respect of whom he was required at any time during the year to prepare or maintain a deductions working sheet in accordance with this Schedule—
a
such particulars as F155HMRC may require for the identification of the employee,
b
the year to which the return relates,
c
in respect of each and under each of the category letters, the total amounts for the year shown under—
i
F20ii
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F21iii
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
d
the total amount of any statutory maternity pay paid during the year; F23...
db
the total amount of statutory adoption pay paid during the yearF253.
F252e
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
The return required by sub-paragraph (1) shall include a statement and declaration in the form approved or prescribed by F155HMRC containing a list of all deductions working sheets on which the employer was obliged to keep records in accordance with this Schedule in respect of that year, and shall also include a certificate showing—
a
the total amount of earnings-related contributions payable by him in respect of each employee during that year;
b
the total amount of earnings-related contributions payable in respect of all his employees during that year;
c
in relation to any contracted-out employment the number notified by F155HMRC on the relevant contracting-out certificate as the employer’s number;
d
in respect of statutory maternity pay paid during that year to all his employees, the total of amounts determined under regulation 3 of the Compensation of Employers Regulations and deducted by virtue of regulation 4 of those Regulations; F24...
F25da
in respect of statutory paternity pay paid during that year to all his employees the total of the amounts determined under regulation 5 of the F224ordinary statutory paternity pay and Statutory Adoption Pay (Administration) Regulations 2002;
daa
db
in respect of statutory adoption pay paid during that year to all his employees the total of the amounts determined under regulation 5 of the Statutory Paternity Pay and Statutory Adoption Pay (Administration) Regulations 2002F253.
F252e
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1662A
Where a liability arises to pay contributions in respect of retrospective earnings relating to a closed tax year, the employer shall render a replacement return, or where necessary prepare one, in respect of the employee for that closed tax year before 20th May following the end of the year in which the relevant retrospective contributions regulations came into force, in accordance with paragraphs (a) to (c) of sub-paragraph (1), setting out the revised earnings and earnings-related contributions.
2B
The return required by sub-paragraph (2A) shall include a statement and declaration in a form prescribed by HMRC containing a list of all deductions working sheets in accordance with paragraph 6(1A) of this Schedule in respect of that year, and shall also include a certificate showing—
a
the total amount of earnings-related contributions originally payable (in accordance with sub-paragraph (2)(a)) in respect of each employee to whom sub-paragraph (2A) applies;
b
the total amount of earnings-related contributions originally payable (in accordance with sub-paragraph (2)(b)) in respect of all employees to whom sub-paragraph (2A) applies;
c
the total amount of revised earnings-related contributions payable in respect of each of those employees;
d
the total amount of revised earnings-related contributions payable in respect of all those employees,
e
the difference between the amount certified in paragraph (b) and paragraph (d) of this sub-paragraph in respect of all of those employees;
f
in relation to any contracted-out employment the number notified by HMRC on the relevant contracting-out certificate as the employer’s number.
3
If paragraph 25 applies, the return required by sub-paragraph (1) and the certificate required by sub-paragraph (2) shall include the information specified in that paragraph.
4
5
If, within 14 days of the end of any year, an employer has failed to pay to the F155HMRC the total amount of earnings-related contributions which he is liable so to pay, the F155HMRC may prepare a certificate showing the amount of such contributions remaining unpaid for the year in question, excluding any amount deducted by the employer by virtue of the Compensation of Employers Regulations.
The provisions of paragraph 17 shall apply with any necessary modifications to the amount shown in that certificate.
6
Notwithstanding sub-paragraphs (2) to (5), F160the returns referred to in sub-paragraphs (1) and (2A) may be made in such other form as F155HMRC and the employer approve, and in that case—
a
sub-paragraphs (2) to (5) shall not apply; and
7
F167Section 98A of the Taxes Management Act 1970 (special penalties in the case of certain returns) and Schedule 24 to the Finance Act 2007 (penalties for errors) as that Schedule applies to income tax returns as modified by the provisions of paragraph 7 of Schedule 1 to the Act shall apply in relation to the requirement to make a return contained in sub-paragraph (1) F156and (2A).
F121Additional return by employer at end of year where liability transferred to employed earner: elections under paragraph 3B(1) of Schedule 1 to the Act.23
1
This paragraph applies where—
a
secondary Class 1 contributions are payable in respect of F124relevant employment income; and
b
an amount or proportion (as the case may be) of the liability of the secondary contributor for those contributions is transferred to the employed earner by an election made jointly by them for the purposes of paragraph 3B(1) of Schedule 1 to the Act.
2
F61Before 7th July after the end of the year the employer shall deliver to the Inland Revenue, in respect of each employed earner to whom any liability is transferred by the election, written particulars of the matters set out in sub-paragraph (3).
3
The matters set out in this paragraph are—
a
the amount of the contributions referred to in sub-paragraph (1)(a);
b
the amount of the transferred liability; and
c
the date on which payment of the amount of the transferred liability was made to the F105Inland Revenue.
Special return by employer at end of voyage period24
1
This paragraph applies where earnings-related contributions are assessed in accordance with regulation 120(4) or (5) (earnings periods for mariners and apportionment of earnings).
2
Not later than 14 days after the end of the voyage period the employer shall render to the F56Inland Revenue in such form as the F56Inland Revenue may authorise a return in respect of each mariner showing—
a
his name, discharge book number and national insurance number;
b
the earnings periods and the amounts of F57general earnings apportioned to each such period in the voyage period;
c
the appropriate category letter for each apportionment of F57general earnings;
d
the amounts of all the earnings-related contributions payable on each apportionment of F57general earnings otherwise than under paragraph 7(3);
e
the amounts of primary Class 1 contributions included in the amounts shown under paragraph (d) for each apportionment of F57general earnings;
f
where the employment is contracted-out employment for any part of the voyage period—
i
the amounts of that part of the contributions shown under paragraph (e) which were payable on earnings above the primary threshold, if primary Class 1 contributions were payable at the reduced rate, and
g
the total amount of any earnings in respect of which primary Class 1 contributions were payable, other than earnings from non-contracted-out employment in respect of which primary Class 1 contributions were payable at the reduced rateF257.
F256h
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Return by employer of recovery under the Statutory Sick Pay Percentage Threshold Order25
1
This paragraph applies where F258a non-Real Time Information employer
recovers any amount in respect of statutory sick pay payments made by him in any F58... tax month in accordance with article 2 of the Statutory Sick Pay Percentage Threshold Order 1995 F12 (right of employer to recover statutory sick pay).
2
The information required pursuant to paragraph F25922(3)
to be included—
a
in the return, is, in respect of each employee, the total amount of statutory sick pay the employer paid in each F58... tax month in respect of which he made that recovery; and
b
in the certificate, is the total amount of statutory sick pay the employer recovered in the F58... tax year.
F199Retention by employer of contribution and election records26
1
An employer must keep and preserve all contribution records which are not required to be sent to HMRC by other provisions in these Regulations for not less than—
a
three years after the end of the tax year to which they relate; or
b
for documents or records relating to information about the amounts of Class 1A and Class 1B contributions, three years after the end of the year in which a contribution became payable.
2
The duty under paragraph (1) may be discharged by preserving the contribution records in any form or by any means.
3
Where an election has been made jointly by the secondary contributor and the employed earner for the purposes of paragraph 3B(1) of Schedule 1 to the Act, the records which the secondary contributor is obliged by paragraph 8 to maintain shall be retained by the secondary contributor throughout the period for which the election is in force and for six years after the end of that period.
4
In this paragraph “contribution records” means wages sheets, deductions working sheets (other than deductions working sheets issued under regulation 35 of the PAYE Regulations (simplified deduction schemes: records)) and other documents or records relating to—
a
the calculation of payment of earnings to the employer's employees or the amount of the earnings-related contributions payable for those earnings;
b
the amount of any Class 1A contributions or Class 1B contributions payable by the employer; and
c
any information about the amounts of Class 1A and Class 1B contributions.
5
For the purposes of this paragraph “employer”—
a
includes, in relation to a Class 1A contribution, the person liable to pay such a contribution in accordance with section 10ZA of the Act (liability of third party provider of benefits in kind); and
b
means, in relation to a Class 1B contribution, the person liable to pay such a contribution in accordance with section 10A of the Act.
Certificate of employer's liability to pay contributions after inspection of documents26A
1
An officer of Revenue and Customs may, by reference to the information obtained from an inspection of the documents and records produced under Schedule 36 to the Finance Act 2008 (information and inspection powers), and on the occasion of each inspection, prepare a certificate showing—
a
the amount of earnings-related contributions which it appears that the employer is liable to pay to HMRC, excluding any amount deducted by the employer by virtue of the Compensation of Employers Regulations for the years or tax periods covered by the inspection; or
b
the amount of any Class 1B contributions which it appears that the employer is liable to pay to HMRC for the years covered by the inspection, or such an amount in addition to an amount referred to in paragraph (a);
together with any amount of earnings-related contributions or Class 1B contributions or a combination of those classes of contributions, which has not been paid to HMRC or, to the best of the officer's knowledge and belief, to any other person to whom it might lawfully be paid.
2
The production of a certificate mentioned in sub-paragraph (1) shall, unless the contrary is proved, be sufficient evidence that the employer is liable to pay to HMRC in respect of the years or, as the case may be, tax periods mentioned in the certificate, the amount shown in the certificate as unpaid; and any document purporting to be such a certificate shall be treated as such a certificate until the contrary is proved.
3
The provisions of paragraph 16 shall apply with any necessary modifications to the amount shown in such a certificate.
4
For the purposes of this paragraph “employer” has the meaning given by paragraph 26(5).
Death of an employer27
If an employer dies, anything which he would have been liable to do under this Schedule shall be done by his personal representatives, or, in the case of an employer who paid F106general earnings on behalf of another person, by the person succeeding him or, if no person succeeds him, the person on whose behalf he paid F106general earnings.
Succession to a business, etc28
1
This paragraph applies where there has been a change in the employer from whom an employee receives F106general earnings in respect of his employment in any trade, business, concern or undertaking, or in connection with any property, or from whom an employee receives any annuity other than a pension.
2
Where this paragraph applies, in relation to any matter arising after the change, the employer after the change shall be liable to do anything which the employer before the change would have been liable to do under this Schedule if the change had not taken place.
3
Sub-paragraph (2) is subject to the qualification that the employer after the change shall not be liable for the payment of any earnings-related contributions which were deductible from emoluments paid to the employee before, unless they are also deductible from emoluments paid to F107the employee after, the change took place, or of any corresponding employer’s earnings-related contributions.
Payments by cheque29
1
Sub-paragraph (2) applies for the purposes of paragraphs 10, 11, 13, 15, 17 and 18.
2
If any payment to the F108Inland Revenue is made by cheque, and the cheque is paid on its first presentation to the banker on whom it is drawn, the payment shall be treated as made on the day on which the cheque was received by the F108Inland Revenue, and “pay”, “paid”, “unpaid” and “overpaid” shall be construed accordingly.
F165PART 3ADEBTS OF MANAGED SERVICE COMPANIES
Sch. 4 Pt. 3A inserted (6.8.2007) by The Social Security (Contributions) (Amendment No. 5) Regulations 2007 (S.I. 2007/2068), regs. 1, 2
Interpretation of this Part29A
1
In this Part of this Schedule—
“HM Revenue and Customs” means Her Majesty’s Revenue and Customs;
“lower amount” means the amount mentioned in paragraph 29C(5);
“managed service company” has the meaning given by section 61B of ITEPA;
“paragraph (b) associate” means a person who—
- a
is within section 688A(2)(d), and
- b
is within that provision by virtue of a connection with a person who is within section 688A(2)(b);
- a
“paragraph (c) associate” means a person who—
- a
is within section 688A(2)(d), and
- b
is within that provision by virtue of a connection with a person who is within section 688A(2)(c);
- a
“qualifying period” means a tax period beginning on or after 6th August 2007;
“relevant contributions debt” means a debt specified in paragraph 29B;
“specified amount” means the amount mentioned in paragraph 29C(1)(b);
“transfer notice” means the notice mentioned in paragraph 29C(4);
“transferee” means the person mentioned in paragraph 29C(4).
2
In this Part of this Schedule references to section 688A, however expressed, are references to section 688A of ITEPA.
Relevant contributions debts of managed service companies29B
1
A managed service company has a relevant contributions debt if—
a
a managed service company must pay an amount of contributions for a qualifying period, and
b
one of conditions A to E is met.
2
Condition A is met if—
a
a decision has been made in accordance with section 8 of the Social Security Contributions (Transfer of Functions, etc.) Act 1999 that an amount of Class 1 National Insurance contributions is due in respect of a qualifying period, and
b
any part of the amount has not been paid within 14 days from the date on which the decision became final and conclusive.
3
Condition B is met if—
a
an employer delivers a return under paragraph 22(1) (return by employer at end of year) for the tax year 2007-08, or any later tax year, showing an amount of total contributions deducted by the employer for that tax year,
b
HM Revenue and Customs prepare a certificate under paragraph 22(5) (certificate that contributions specified in return under paragraph 22(1) remain unpaid) showing how much of that amount remains unpaid, and
c
any part of that amount remains unpaid at the end of a period of 14 days beginning with the date on which the certificate is prepared.
4
Condition C is met if—
a
HM Revenue and Customs prepare a certificate under paragraph 14(1) (employer failing to pay earnings-related contributions) showing an amount of contributions which the employer is liable to pay for a qualifying period, and
b
any part of that amount remains unpaid at the end of a period of 14 days beginning with the date on which the certificate is prepared.
5
Condition D is met if—
a
HM Revenue and Customs serve notice on an employer under paragraph 15(1) (specified amount of earnings-related contributions payable by the employer) requiring payment of the amount of Class 1 contributions which they consider the employer is liable to pay, and
b
any part of that amount remains unpaid at the end of a period of 14 days beginning with the date on which the notice is prepared.
6
Condition E is met if—
a
HM Revenue and Customs prepare a certificate under F202paragraph 26A (certificate of employer's liability to pay contributions after inspection of documents) showing an amount of contributions which it appears that the employer is liable to pay for a qualifying period,
b
HM Revenue and Customs make a written demand for payment of that amount of contributions, and
c
any part of that amount remains unpaid at the end of a period of 14 days beginning with the date on which the written demand for payment is made.
Transfer of debt of managed service company29C
1
This paragraph applies if—
a
a managed service company has a relevant contributions debt, and
b
an officer of Revenue and Customs is of the opinion that the relevant contributions debt or a part of the relevant contributions debt (the “specified amount”) is irrecoverable from the managed service company within a reasonable period.
2
HM Revenue and Customs may make a direction authorising the recovery of the specified amount from the persons specified in section 688A(2) (managed service companies: recovery from other persons).
3
Upon the making of a direction under sub-paragraph (2), the persons specified in section 688A(2) become jointly and severally liable for the relevant contributions debt, but subject to what follows.
4
HM Revenue and Customs may not recover the specified amount from any person in accordance with a direction made under sub-paragraph (2) until they have served a notice (a “transfer notice”) on the person in question (the “transferee”).
5
If an officer of Revenue and Customs is of the opinion that it is appropriate to do so, HM Revenue and Customs may accept an amount less than the specified amount (the “lower amount”) from a transferee; but this acceptance shall not prejudice the recovery of the specified amount from any other transferee.
6
HM Revenue and Customs may not serve a transfer notice on a person mentioned in section 688A(2)(c), or on a paragraph (c) associate, if the relevant contributions debt is incurred before 6th January 2008.
7
HM Revenue and Customs may not serve a transfer notice on a person mentioned in section 688A(2)(c), or on a paragraph (c) associate, unless an officer of Revenue and Customs certifies that, in his opinion, it is impracticable to recover the specified amount from persons mentioned in paragraphs (a) and (b) of section 688A(2) and from paragraph (b) associates.
8
In determining, for the purposes of sub-paragraph (7), whether it is impracticable to recover the specified amount from the persons mentioned in paragraphs (a) and (b) of section 688A(2) and from paragraph (b) associates the officer of Revenue and Customs may have regard to all managed service companies in relation to which a person is a person mentioned in paragraph (a) or (b) of section 688A(2) or a paragraph (b) associate.
9
In determining which of the persons mentioned in section 688A(2)(c) and which of the paragraph (c) associates are to be served with transfer notices and the amount of those notices, HM Revenue and Customs must have regard to the degree and extent to which those persons are persons who (directly or indirectly) have encouraged or been actively involved in the provision by the managed service company of the services of the individual mentioned in that provision.
Time limits for issue of transfer notices29D
1
A transfer notice must be served before the end of the period specified in this paragraph.
2
Sub-paragraphs (3) to (7) apply if the transfer notice is served on a person mentioned in paragraph (a) or (b) of section 688A(2) or on a paragraph (b) associate.
3
In a case in which condition A in paragraph 29B is met, the transfer notice must be served before the end of a period of 12 months beginning with the date on which the decision became final and conclusive.
4
In a case in which condition B in paragraph 29B is met, the transfer notice must be served before the end of a period of 12 months beginning with the date on which HM Revenue and Customs received the return delivered under paragraph 22.
5
In a case in which condition C in paragraph 29B is met, the transfer notice must be served before the end of a period of 12 months beginning with the date on which HM Revenue and Customs prepare the certificate under paragraph 14(1).
6
In a case in which condition D in paragraph 29B is met, the transfer notice must be served before the end of a period of 12 months beginning with the date on which HM Revenue and Customs serve notice to the employer under paragraph 15(1).
7
In a case in which condition E in paragraph 29B is met, the transfer notice must be served before the end of a period of 12 months beginning with the date on which HM Revenue and Customs carry out the inspection of the employer’s contribution records under F203Schedule 36 to the Finance Act 2008.
8
If the transfer notice is served on a person mentioned in paragraph (c) of section 688A(2), or on a paragraph (c) associate, the transfer notice must be served before the end of a period of three months beginning with the date on which the officer of Revenue and Customs certifies the matters specified in paragraph 29C(7).
Contents of transfer notice29E
1
A transfer notice must contain the following information—
a
the name of the managed service company to which the relevant contributions debt relates;
b
the address of the managed service company to which the relevant contributions debt relates;
c
the amount of the relevant contributions debt;
d
the tax periods to which the relevant contributions debt relates;
e
if the tax periods to which the relevant contributions debt relates are comprised in more than one tax year, the apportionment of the relevant contributions debt among those tax years;
f
which of the conditions A to E specified in paragraph 29B is met;
g
the transferee’s name;
h
the transferee’s address;
j
whether the transferee is a person mentioned in paragraph (a), (b) or (c) of section 688A, a paragraph (b) associate or a paragraph (c) associate;
k
if the transferee is a person mentioned in paragraph (c) of section 688A or a paragraph (c) associate—
i
the date on which the officer of Revenue and Customs certified the matters specified in paragraph 29C(7), and
ii
the names of the persons from whom it has been impracticable to recover the specified amount;
l
the specified amount;
m
the tax periods to which the specified amount relates;
n
if the tax periods to which the specified amount relates are comprised in more than one tax year, the apportionment of the specified amount among those tax years;
o
the address to which payment must be sent;
p
the address to which an appeal must be sent.
2
The transfer notice may specify the lower amount if HM Revenue and Customs are prepared to accept the lower amount from the transferee.
3
The transfer notice must also contain a statement, made by the officer of Revenue and Customs serving the notice, that in his opinion the specified amount is irrecoverable from the managed service company within a reasonable period.
Payment of the specified amount29F
1
If a transfer notice is served, the transferee must pay the specified amount to HM Revenue and Customs at the address specified in the transfer notice.
2
The transferee must pay the specified amount within 30 days beginning with the date on which the transfer notice is served (the “specified period”).
3
If a transfer notice is served on a person mentioned in paragraph (a) or (b) of section 688A(2), or on a paragraph (b) associate, the specified amount carries interest from the reckonable date until the date on which payment is made.
4
If a transfer notice is served on a person mentioned in paragraph (c) of section 688A(2), or on a paragraph (c) associate, the specified amount carries interest from the day following the expiry of the specified period until the date on which payment is made.
F2045
For the purposes of sub-paragraph (3) “the reckonable date” has the meaning given by paragraph 17(3)(b)(i).
Appeals29G
1
A transferee may appeal against the transfer notice.
2
A notice of appeal must—
a
be given to HM Revenue and Customs at the address specified in the transfer notice within 30 days beginning with the date on which the transfer notice was served, and
b
specify the grounds of the appeal.
3
The grounds of appeal are any of the following—
a
that the relevant contributions debt (or part of the relevant contributions debt) is not due from the managed service company to HM Revenue and Customs;
b
that the specified amount does not relate to a company which is a managed service company;
c
that the specified amount is not irrecoverable from the managed service company within a reasonable period;
d
that the transferee is not a person mentioned in section 688A(2);
e
that the transferee was not a person mentioned in section 688A(2) during the tax periods to which the specified amount relates;
f
that the transferee was not a person mentioned in section 688A(2) during some part of the tax periods to which the specified amount relates;
g
that the transfer notice was not served before the end of the period specified in paragraph 29D;
h
that the transfer notice does not satisfy the requirements specified in paragraph 29E;
j
in the case of a transferee mentioned in section 688A(2)(c) or of a paragraph (c) associate, that it is not impracticable to recover the specified amount from persons mentioned in paragraphs (a) and (b) of section 688A(2) or from paragraph (b) associates;
k
in the case of a transferee mentioned in section 688A(2)(c) or of a paragraph (c) associate, that the amount specified in the transfer notice does not have regard to the degree and extent to which the transferee is a person who (directly or indirectly) has encouraged or been actively involved in the provision by the managed service company of the services of the individual mentioned in that provision.
4
Sub-paragraph (3)(a) is subject to paragraph 29H(4).
F2055
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Procedure on appeals29H
1
On an appeal F206that is notified to the tribunal, the tribunal shall uphold or quash the transfer notice.
2
The general rule in sub-paragraph (1) is subject to the following qualifications.
3
In the case of the ground of appeal specified in paragraph 29G(3)(a), the F207tribunal shall investigate the matter and shall—
a
uphold the amount of the relevant contributions debt specified in the transfer notice, or
b
reduce or increase the amount of the relevant contributions debt specified in the transfer notice to such amount as in F208the tribunal’s opinion is just and reasonable.
4
If the F209tribunal determines the amount of the relevant contributions debt of a managed service company under sub-paragraph (3), that amount is conclusive as to the amount of that relevant contributions debt in any later appeal relating to that debt.
5
In the case of the ground of appeal specified in paragraph 29G(3)(f), the F210tribunal may reduce the amount specified in the transfer notice to an amount determined in accordance with the equation—
6
In paragraph (5)—
RA means the reduced amount;
P means the number of days in the tax periods specified in the transfer notice during which the transferee was a person mentioned in section 688A(2);
TP means the number of days in the tax periods specified in the transfer notice;
AS means the amount specified in the transfer notice.
7
Withdrawal of transfer notices29J
1
A transfer notice shall be withdrawn if the F213tribunal quashes it.
2
A transfer notice may be withdrawn if, in the opinion of an officer of Revenue and Customs, it is appropriate to do so.
3
If a transfer notice is withdrawn, HM Revenue and Customs must give written notice of that fact to the transferee.
Application of Part 6 of the Taxes Management Act 197029K
1
For the purposes of this Chapter, Part 6 of the Taxes Management Act 1970 (collection and recovery) applies as if—
a
the transfer notice were an assessment of tax on employment income, and
b
the amount of earnings-related contributions specified in the transfer notice, and any interest payable on that amount under sub-paragraph (3) or (4) of paragraph 29F were income tax charged on the transferee;
and that Part of that Act applies with the modification specified in sub-paragraph (2) and any other necessary modifications.
2
Summary proceedings for the recovery of the specified amount may be brought in England and Wales or Northern Ireland at any time before the end of a period of 12 months beginning immediately after the expiry of the period mentioned in paragraph 29F(2).
3
The specified amount is one cause of action or one matter of complaint for the purposes of proceedings under sections 65, 66 and 67 of the Taxes Management Act 1970 (magistrates’ courts, county courts and inferior courts in Scotland).
4
But sub-paragraph (3) does not prevent the bringing of separate proceedings for the recovery of each of the amounts which the transferee is liable to pay for any tax period.
Repayment of surplus amounts29L
1
This paragraph applies if the amounts paid to HM Revenue and Customs in respect of a relevant contributions debt exceed the specified amount.
2
HM Revenue and Customs shall repay the difference on a just and equitable basis and without unreasonable delay.
3
Interest on any sum repaid shall be paid in accordance with paragraph 18 (payment of interest on repaid earnings-related contributions).
F228PART 3BSecurity for the payment of Class 1 contributions
Sch. 4 Pt. 3B inserted (6.4.2012) by The Social Security (Contributions) (Amendment No. 3) Regulations 2012 (S.I. 2012/821), regs. 1(1), 18
Interpretation29M
In this Part—
“employer” has the meaning given in paragraph 29O(1);
“a further notice” has the meaning given in paragraph 29U(3);
“PGS” has the meaning given in paragraph 29S(1).
Requirement for security29N
In circumstances where an officer of Revenue and Customs considers it necessary for the protection of Class 1 contributions, the officer may require a person described in paragraph 29P(1) to give security or further security for the payment of amounts which an employer is or may be liable to pay to HMRC under paragraph 10, 11F289, 11ZA or 11A.
Employers29O
1
An “employer” is any employer within the meaning given in paragraph 1(2) other than—
a
the Crown;
b
a person to whom sub-paragraph (2) applies;
c
a person who employs only employees who are personal employees within the meaning given in regulation 34(3) of the PAYE Regulations; and
d
a care and support employer within the meaning given in regulation 90NA(3) of these Regulations.
2
This sub-paragraph applies to persons who at the relevant time could not be liable to a penalty under Schedule 56 to the Finance Act 2009 by virtue of paragraph 10 of that Schedule (suspension of penalty for failure to make payments on time during currency of agreement for deferred payment).
3
In sub-paragraph (2), the relevant time is a time at which, but for sub-paragraph (1)(b), the officer would require security.
Persons from whom security can be required29P
1
The persons are—
a
the employer;
b
any of the following in relation to the employer—
i
a director;
ii
a company secretary;
iii
any other similar officer; or
iv
any person purporting to act in such a capacity; and
c
in a case where the employer is a limited liability partnership, a member of the limited liability partnership.
2
An officer of Revenue and Customs may require—
a
a person to give security or further security of a specified value in respect of the employer; or
b
more than one person to give security or further security of a specified value in respect of the employer, and where the officer does so those persons shall be jointly and severally liable to give that security or further security.
Notice of requirement29Q
1
An officer of Revenue and Customs must give notice of a requirement for security to each person from whom security is required and the notice must specify—
a
the value of security to be given;
b
the manner in which security is to be given;
c
the date on or before which security is to be given; and
d
the period of time for which security is required.
2
The notice must include, or be accompanied by, an explanation of—
a
the employer's right to make a request under paragraph 10(1) of Schedule 56 to the Finance Act 2009; and
b
the effect of paragraph 29R(2) and (3).
3
In a case which falls within paragraph 29P(2)(b), the notice must include, or be accompanied by, the names of each other person from whom security is required.
4
The notice may contain such other information as the officer considers necessary.
5
A person shall not be treated as having been required to provide security unless HMRC comply with this paragraph and paragraph 29R(1).
6
Notwithstanding anything in regulation 1(4)(b), where the notice, or a further notice, (“contributions notice”) is to be given with a notice or further notice mentioned in regulations 97Q(1) and 97U(3) of the PAYE Regulations (“PAYE notice”) the contributions notice shall be taken to be given at the same time that the PAYE notice is given.
Date on which security is due29R
1
The date specified under paragraph 29Q(1)(c) may not be earlier than the 30th day after the day on which the notice is given.
2
If, before the date specified under paragraph 29Q(1)(c), the employer makes a request under paragraph 10(1) of Schedule 56 to the Finance Act 2009, the requirement to give security on or before that date does not apply.
3
In a case which falls within sub-paragraph (2), if HMRC does not agree to the employer's request, security is to be given on or before the 30th day after the day on which HMRC notifies the employer of that decision.
Application for reduction in the value of security held29S
1
A person who has given security (“PGS”) may apply to an officer of Revenue and Customs for a reduction in the value of security held by HMRC if—
a
PGS' circumstances have changed since the day the security was given because—
i
of hardship; or
ii
PGS has ceased to be a person mentioned in paragraph 29P(1); or
b
since the day the security was given there has been a significant reduction in the number of employed earners of the employer to whom the security relates or that employer has ceased to be an employer.
2
Where paragraph 29P(2)(b) applies, a person who has not contributed to the value of the security given may not make an application under sub-paragraph (1).
Outcome of application under paragraph 29S29T
1
If an application under paragraph 29S(1) is successful, the officer must inform PGS of the reduced value of security that is still required or, where that value is nil, that the requirement for security has been cancelled.
2
HMRC may make such arrangements as they think fit to ensure the necessary reduction in the value of security held.
Outcome of application under paragraph 29S: further provision29U
1
This paragraph applies—
a
in cases which fall within paragraph 29P(2)(b); and
b
where PGS' application is made under paragraph 29S(1)(a).
2
As a consequence of arrangements made under paragraph 29T(2), an officer of Revenue and Customs may require any other person who was given notice under paragraph 29Q in relation to the security (“the original security”), or any other person mentioned in paragraph 29P(1), to provide security in substitution for the original security.
3
Where an officer of Revenue and Customs acts in reliance on sub-paragraph (2), the officer must give notice (“a further notice”).
4
Paragraph 29Q(1) to (5) and paragraph 29R apply in relation to a further notice.
5
Subject to sub-paragraph (6), paragraph 29V(1) applies in relation to a further notice.
6
A person who is given a further notice and who was also given notice under paragraph 29Q in relation to the original security may only appeal on the grounds that the person is not a person mentioned in paragraph 29P(1).
Appeals29V
1
A person who is given notice under paragraph 29Q may appeal against the notice or any requirement in it.
2
PGS may appeal against—
a
the rejection by an officer of Revenue and Customs of an application under paragraph 29S(1); and
b
a smaller reduction in the value of security held than PGS applied for.
3
Notice of an appeal under this paragraph must be given—
a
before the end of the period of 30 days beginning with—
i
in the case of an appeal under sub-paragraph (1), the day after the day on which the notice was given; and
ii
in the case of an appeal under sub-paragraph (2), the day after the day on which PGS was notified of the outcome of the application; and
b
to the officer of Revenue and Customs by whom the notice was given or the decision on the application was made, as the case may be.
4
Notice of an appeal under this paragraph must state the grounds of appeal.
5
On an appeal under sub-paragraph (1) that is notified to the tribunal, the tribunal may—
a
confirm the requirements in the notice;
b
vary the requirements in the notice; or
c
set aside the notice.
6
On an appeal under sub-paragraph (2) that is notified to the tribunal, the tribunal may—
a
confirm the decision on the application; or
b
vary the decision on the application.
7
On the final determination of an appeal under this paragraph—
a
subject to any alternative determination by a tribunal or court, any security to be given is due on the 30th day after the day on which the determination is made; or
b
HMRC may make such arrangements as they think fit to ensure the necessary reduction in the value of the security held.
8
Part 5 of the Taxes Management Act 1970 (appeals and other proceedings) applies in relation to an appeal under this paragraph as it applies in relation to an appeal under the Taxes Acts but as if—
a
sections 46D, 47B, 50(6) to (9) and (11)(c) and 54A to 57 were omitted; and
b
in section 48(1)—
i
in paragraph (a) the reference to “the Taxes Acts” were a reference to “paragraph 29V of Schedule 4 to the Social Security (Contributions) Regulations 2001”; and
ii
in paragraph (b) the reference to “any provision of the Taxes Acts” were a reference to “paragraph 29V of Schedule 4 to the Social Security (Contributions) Regulations 2001”.
Appeals: further provision for cases which fall within paragraph 29R(2)29W
In a case which falls within paragraph 29R(2), if the request mentioned in that provision is made before an appeal under paragraph 29V(1), paragraph 29V(3)(a)(i) applies as if the words “the day after the day on which the notice was given” were “the day after the day on which HMRC notifies the employer of its decision”.
Offence29X
1
Section 684(4A) of the Income Tax (Earnings and Pensions) Act 2003 (PAYE regulations – security for payment of PAYE: offence) applies in relation to a requirement imposed under these Regulations as it applies in relation to a requirement imposed under the PAYE Regulations.
2
For the purposes of section 684(4A) as it applies by virtue of sub-paragraph (1)—
a
in relation to a requirement for security under a notice under paragraph 29Q the period specified is the period which starts with the day the notice is given and ends with—
i
the first day after the date specified under paragraph 29Q(1)(c); or
ii
in a case which falls within paragraph 29R(2), the first day after the date determined under paragraph 29R(3);
b
in relation to a requirement for security under a further notice the period specified is the period which starts with the day the further notice is given and ends with—
i
the first day after the date specified under paragraph 29Q(1)(c) as it applies in relation to the further notice; or
ii
in a case which falls within paragraph 29R(2), the first day after the date determined under paragraph 29R(3) as it applies in relation to the further notice; and
c
in relation to a requirement for security to which paragraph 29V(7)(a) applies the period specified is the period which starts with the day the determination is made and ends with the first day after—
i
the day the tribunal or court determines to be the day that the security is to be given; or
ii
the day determined in accordance with that paragraph,
as the case may be.
PART IV ASSESSMENT AND DIRECT COLLECTION
Provisions for direct payment30
In cases of employed earner’s employment, where the employer does not fulfil the conditions prescribed in regulation 145(1)(b) as to residence or presence in Great Britain or Northern Ireland or is a person who, by reason of any international treaty to which the United Kingdom is a party or of any international convention binding on the United Kingdom, is exempt from the provisions of the Act or is a person against whom, for a similar reason, the provisions of the Act are not enforceable, the provisions of paragraph 31 shall apply to the employee, unless the employer, being a person entitled to pay the primary contributions due in respect of the earnings from the said employment, is willing to pay those contributions.
F260Application of paragraphs 31 and 31A30A
1
Paragraph 31(4) to (7) does not apply on or after 6th April 2014.
2
Paragraph 31(7A) and (7B) applies only in relation to closed tax years ending on or before 5th April 2014.
3
Paragraph 31A applies on and after 6th April 2014.
Direct collection involving deductions working sheets31
1
2
The employee to whom a deductions working sheet has been issued under sub-paragraph (1) shall record on that working sheet his name, national insurance number and category letter indicated by F162HMRC, and whenever, in respect of an employment such as is specified in paragraph 30, the employee receives any F109general earnings during the year for which the deductions working sheet was issued, he shall also record on that working sheet the amount of the F109earnings, the date on which he received them, and the earnings-related contributions payable by him in respect of those F109earnings .
3
Not later than the time for the payment of income tax, if any, the employee shall pay to F162HMRC the amount of the earnings-related contributions payable by the employee in respect of the F110general earnings which have been received by him and for which the income tax is or would have been payable.
4
If, by the time specified in sub-paragraph (3), the employee has paid no amount of earnings-related contributions to F162HMRC in respect of the F111general earnings mentioned in that sub-paragraph, and F162HMRC is unaware of the amount, if any, which the employee is liable so to pay, or if an amount has been paid but F162HMRC is not satisfied that it is the full amount which the employee is liable to pay to him in respect of those F111earnings, sub-paragraph (5) applies.
5
If this sub-paragraph applies, F162HMRC may give notice to the employee requiring him to render, within the time limited in the notice, a return in the prescribed form containing particulars of all F112general earnings received by him during the period specified in the notice and such other particulars affecting the calculations of the earnings-related contributions payable in respect of the F112earnings in question as may be specified in the notice, and in such a case the provisions of—
a
paragraph 14 regarding the ascertaining and certifying by F162HMRC of earnings-related contributions payable by an employer, and
b
paragraph 16 regarding the recovery of those contributions.
shall apply with the necessary modifications for the purposes of ascertaining, certifying and recovering the earnings-related contributions payable by the employee.
6
If the employee ceases to receive F113general earnings falling within sub-paragraph (2), he shall immediately render to F114F162HMRC, in such form as they may prescribe, a return showing such particulars as they may require for the identification of the employee, the year to which the return relates, the appropriate category letter, the last date on which he received any such F113earnings, the total of those F113earnings and the earnings-related contributions payable from the beginning of the year to that date.
7
F115Before 20th May following the end of the year, the employee shall (unless sub-paragraph (6) has applied) render to F116F162HMRC, in such form as they may prescribe, a return showing such particulars as they may require for the identification of the employee, the year to which the return relates, the total of the F117general earnings and earnings-related contributions payable during the year, together with the appropriate category letter, and the provisions of paragraph 22(5) regarding the certification and recovery of earnings-related contributions remaining unpaid by an employer for any year shall apply in the case of any earnings-related contributions remaining unpaid by the employee.
F1637A
Where a liability arises to pay contributions in respect of retrospective earnings relating to a closed tax year, the F291employee shall render a replacement return for the closed tax year before 20th May following the end of the year in which the relevant retrospective contributions regulations came into force in accordance with sub-paragraph (7), setting out the revised earnings and earnings-related contributions.
7B
Where sub-paragraph (7A) applies, the F291employee shall amend the relevant deductions working sheet or where necessary prepare one in accordance with sub-paragraph (2)
8
The employee shall retain deductions working sheets issued under sub-paragraph (1) for not less than three years after the end of the year to which they relate.
9
F168Section 98A of the Taxes Management Act 1970 (special penalties in the case of certain returns) and Schedule 24 to the Finance Act 2007 (penalties for errors) as that Schedule applies to income tax returns as modified by the provisions of paragraph 7 to Schedule 1 to the Act, shall apply in relation to the requirement to make a return contained in sub-paragraphs F164(6), (7) and (7A).
F261Direct collection involving deductions working sheets on and after 6th April 201431A
1
On receiving any general earnings which fall to be recorded on a deductions working sheet under paragraph 31(2), subject to sub-paragraph (2), an employee must proceed in accordance with paragraph 21A(1), (2) and (5).
2
If the employee falls within paragraph 21D(1)(a), the employee may instead proceed in accordance with paragraph 21D(3), (4) and (5).
3
For the purposes of sub-paragraph (1), paragraph 21A(8) and paragraphs 21AB, 21AC, 21AD, 21B and 21C apply as if the employee were a Real Time Information employer.
4
For the purposes of sub-paragraph (2), paragraph 21D(9) applies as if the employee were a Real Time Information employer.
5
For the purposes of sub-paragraphs (1) and (2), paragraphs 15, 16, 21E, 21EA and 21F(7A) and (8) and Schedule 4A apply as if the employee were a Real Time Information employer, but the information required by paragraph 10(a) and (b) of that Schedule need not be provided.
Sch. 4 heading substituted (6.4.2004) by The Social Security (Contributions, Categorisation of Earners and Intermediaries) (Amendment) Regulations 2004 (S.I. 2004/770), regs. 1(1), 29(2)