PART 4PAYMENTS, RETURNS AND INFORMATION
CHAPTER 1PAYMENT OF TAX AND ASSOCIATED RETURNS
Payment and recovery of tax by employer
Recovery from employee of tax not deducted by employerI172
1
This regulation applies if—
a
it appears to the Inland Revenue that the deductible amount exceeds the amount actually deducted, and
b
condition A or B is met.
2
In this regulation F2and regulations 72A and 72B—
“the deductible amount” is the amount which an employer was liable to deduct from relevant payments made to an employee in a tax period;
“the amount actually deducted” is the amount actually deducted by the employer from relevant payments made to that employee during that tax period;
“the excess” means the amount by which the deductible amount exceeds the amount actually deducted.
3
Condition A is that the employer satisfies the Inland Revenue—
a
that the employer took reasonable care to comply with these Regulations, and
b
that the failure to deduct the excess was due to an error made in good faith.
4
Condition B is that the Inland Revenue are of the opinion that the employee has received relevant payments knowing that the employer wilfully failed to deduct the amount of tax which should have been deducted from those payments.
5
The Inland Revenue may direct that the employer is not liable to pay the excess to the Inland Revenue.
F15A
Any direction under paragraph (5) must be made by notice (“the direction notice”), stating the date the notice was issued, to—
a
the employer and the employee if condition A is met;
b
the employee if condition B is met.
5B
A notice need not be issued to the employee under paragraph (5A)(a) if neither the Inland Revenue nor the employer are aware of the employee’s address or last known address.
6
If a direction is made, the excess must not be added under regulation 185(5) or 188(3)(a) (adjustments to total net tax deducted for self-assessments and other assessments) in relation to the employee.
7
If condition B is met, tax payable by an employee as a result of a direction carries interest, as if it were unpaid tax due from an employer, in accordance with regulation 82 (interest on tax overdue).
8
The tax payable carries interest from the reckonable date until whichever is the earlier of—
a
the date on which payment is made, or
b
the date (if any) immediately before the date on which it begins to carry interest under section 86 of TMA38.