The Income Tax (Employments) (Amendment) Regulations 2003

Amendment of the Income Tax (Employments) Regulations 1993

7.  After regulation 42 insert—

“Mandatory electronic payment

42A.— (1) A large employer to whom an e-payment notice has been issued by 31st December following the specified date is required to use an approved method of electronic communications for the making of specified payments.

(2) For the purposes of—

(a) this regulation and regulation 42B, “specified payments” are payments of tax the employer is due to make under regulation 40 in respect of payments of emoluments in the year following that in which the specified date occurs;

(b) this regulation, regulation 42B and regulation 46ZD, “a large employer” is a person treated as paying PAYE income to 250 or more recipients at the specified date;

(c) this regulation—

(i) “e-payment notice” means a notice issued in respect of a year by an officer of the Board stating that the person appears to be a large employer and accordingly is required to use an approved method of electronic communications for the making of specified payments;

(ii) “the specified date” means such date in the preceding year as is announced annually by means of a direction given by the Board not later than 30th November of the preceding year;

(iii) “the preceding year” means the year preceding the year in which were paid the emoluments to which the specified payments relate.

(3) A person is treated as paying PAYE income to a recipient at the specified date where—

(a) he is required at that date by these Regulations or by regulation 6(6) of the Working Tax Credit (Payment by Employers) Regulations 2002(1) to prepare or maintain a deductions working sheet in respect of the recipient, and

(b) he has not sent, transmitted or delivered to the inspector a statement required by regulation 23(2) for the recipient.

(4) A person may appeal against an e-payment notice—

(a) by notice to an officer of the Board,

(b) within 30 days of the issue of the e-payment notice,

(c) on the grounds that the person is not a large employer, and if the appeal is successful the e-payment notice shall be withdrawn.

(5) The Board may give specific or general directions—

(a) suspending, for any period during which the use of an approved method of electronic communications for the making of payments is impossible or impractical, any requirement imposed by these Regulations relating to the use of such means;

(b) substituting alternative requirements for the suspended ones; and

(c) making any provision that is necessary in consequence of the imposition of the substituted requirements.

Default surcharge

42B.— (1) Subject to paragraph (4), a person is in default in respect of a specified payment required to be made by an approved method of electronic communications in accordance with regulation 42A where the payment is not received in full by the collector on or before the applicable due date.

(2) For the purpose of this regulation the applicable due date in relation to any specified payment is the date on which payment is required in accordance with regulation 40.

(3) For the purposes of paragraph (1), a payment is not treated as received in full by the collector on or before the applicable due date unless it is made in such manner as secures (in a case where the payment is made otherwise than in cash) that, on or before the applicable due date for payment of that amount, all transactions can be completed that need to be completed before the whole amount of the payment becomes available to the collector.

(4) Subject to paragraph (5), paragraph (1) does not apply if the employer had a reasonable excuse for failing to make the specified payment in such manner as secures it is received in full by the collector on or before the applicable due date and the payment is received in full by the collector without unreasonable delay after the excuse ceased.

(5) Inability to pay the specified payment is not a reasonable excuse for the purposes of paragraph (4).

(6) An officer of the Board shall issue a default notice to any person who appears to be in default in respect of a specified payment.

(7) A person may appeal against a default notice—

(a) by notice to an officer of the Board,

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

(c) on the grounds that—

(i) the person is not in default; or

(ii) subject to paragraph (8), the person is not a large employer, and if the appeal is successful the default notice shall be withdrawn.

(8) Paragraph (7)(c)(ii) does not apply where following an appeal under regulation 42A(5) the notice was not withdrawn.

(9) A person in default in respect of any specified payment to whom a default notice and a surcharge notice have been issued is liable to a surcharge equal to the aggregate of the surcharges in respect of every default relating to the year in which were paid the emoluments to which the specified payments relate, calculated in accordance with paragraph (10).

(10) For the purpose of paragraph (9), the surcharge in respect of each default is equal to a specified percentage of the total of—

A - B,

where—

(a)

A is the total amount of tax due for the year in which were paid the emoluments to which the specified payment relates;

(b)

B is the total of the amounts deducted from the total amount of tax due for the year in which were paid the emoluments to which the specified payment relates under—

(i)

rule 1 of regulation 7(2) of the Working Tax Credit (Payment by Employers) Regulations 2002(3);

(ii)

regulations 3 and 5 of the Statutory Paternity Pay and Statutory Adoption Pay (Administration) Regulations 2002(4);

(iii)

regulations 4, 5 and 6 of the Statutory Maternity Pay (Compensation of Employers) and Miscellaneous Amendment Regulations 1994(5); and

(iv)

regulation 44B of the Income Tax (Sub-contractors in the Construction Industry) Regulations 1993(6);

(c)

the specified percentage is determined by reference to the number of the defaults during the surcharge period in accordance with the Table below;

Table

Default number (within the surcharge period)	Specified percentage
First	0%
Second	0%
Third	0.17%
Fourth	0.17%
Fifth	0.17%
Sixth	0.33%
Seventh	0.33%
Eighth	0.33%
Ninth	0.58%
Tenth	0.58%
Eleventh	0.58%
Twelfth and subsequent defaults	0.83%

and

(d)

the surcharge period is a period which—

(i)

begins on the day following the applicable due date for the first specified payment in respect of which the person is in default, and

(ii)

ends at the end of a year in which the person has not been in default in respect of any specified payment.

(11) For the purposes of this regulation, a surcharge notice is a notice issued by an officer of the Board within six years of the end of the year or, if earlier, of the employer rendering a return in accordance with regulation 43(7), to a person liable to a surcharge showing the total surcharge liability for all the defaults relating to that year.

(12) A person may appeal against a surcharge notice—

(a) by notice to an officer of the Board,

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

(c) on the grounds that—

(i) subject to paragraph (13), the number of defaults stated in the notice is incorrect; or

(ii) the amount of the surcharge is incorrect.

(13) Paragraph (12)(c)(i) does not apply in respect of a disputed default which has already been the subject of an appeal under paragraph (7) following which the notice was not withdrawn.

(14) Subject to paragraphs (12) and (15), the provisions of Parts 4, 5 and 6 of the Management Act(8) apply to the surcharge notice as if it were an assessment and the amount of the surcharge was tax charged by the assessment.

(15) On an appeal under paragraph (12), section 50(6) to (8) of the Management Act shall not apply but the Commissioners may—

(a) if it appears to them that no surcharge has been incurred, set the surcharge notice aside,

(b) if the amount of the total surcharge liability appears to them to be correct, confirm the surcharge notice, or

(c) if the amount of the total surcharge liability appears to them to be incorrect, increase or reduce it to the correct amount.

(16) A surcharge payable under this regulation is payable 30 days after the issue of the surcharge notice.

(17) Section 102 of the Management Act (mitigation of penalties) applies to a surcharge payable under this regulation as if it were a penalty.”.

(1)

S.I. 2002/2172.

(2)

Regulation 23 was amended by regulations 1 and 3 of the Income Tax (Employments) (Amendment) Regulations 1996 (S.I. 1996/804), regulation 5 of the Income Tax (Employments) (Amendment) Regulations 1998 (S.I. 1998/2484) and regulations 7 and 10 of the Income Tax (Electronic Communications) (Miscellaneous Amendments) Regulations 2001 (S.I. 2001/1081).

(3)

S.I. 2002/2172.

(4)

S.I. 2002/2820.

(5)

S.I. 1994/1882, regulations 4, 5 and 6 were substituted by regulation 4 of the Statutory Maternity (Compensation of Employers) Amendment Regulations 2003 (2003/672).

(6)

S.I. 1993/743, regulation 44B was inserted by regulation 8 of the Income Tax (Sub-contractors in the Construction Industry) (Amendment) Regulations 2003 (S.I. 2003/536).

(7)

Regulation 43 was amended by regulation 14 of the Income Tax (Employments) (Amendment) Regulations 1998 (S.I. 1998/2484) and regulation 7 and 15 of the Income Tax (Electronic Communications) (Miscellaneous Amendments) Regulations 2001 (S.I. 2001/1081).

(8)

1970 c. 9.