PART 4PAYMENTS, RETURNS AND INFORMATION

CHAPTER 1PAYMENT OF TAX AND ASSOCIATED RETURNS

Failure to account for deductible tax

Notice and certificate if tax may be unpaid F2: amounts due under regulation 6878

1

This regulation applies if, 17 days or more after the end of a tax period, condition A or B is met.

2

Condition A is that—

a

an employer has not paid any tax under regulation 68 for that tax period, and

b

F13HMRC have reason to believe that the employer is liable to pay an amount of tax.

3

Condition B is that—

a

an employer has paid an amount of tax under regulation 68 for that tax period, but

b

F8HMRC are not satisfied, after seeking the employer’s explanation, that it is the full amount which the employer is liable to pay for that period.

4

F15HMRC, on consideration of the employer’s record of past payments F18whether of tax or of combined amounts, may—

a

specify, to the best of their judgment, the amount of tax F14or a combined amount which they consider the employer is liable to pay, and

b

serve notice on the employer requiring payment of that amount within 7 days of the issue of the notice (“the notice period”).

5

If the notice extends to two or more consecutive tax periods in a tax year, this regulation has effect as if they were the latest tax period specified in the notice.

6

If, during the notice period, the employer—

a

claims that any payment made in respect of the tax period specified in the notice is F11or includes the full amount F10of tax the employer is liable to pay, but

b

does not satisfy F9HMRC that this is the case,

the employer may require F9HMRC to inspect the employer’s PAYE records as if the employer had been required to produce those records F1under Schedule 36 to the Finance Act 2008 (information and inspection powers).

7

If there is an inspection by virtue of paragraph (6) ... the notice given by F6HMRC under paragraph (4) must be disregarded.

8

If the amount ... specified in the notice, or any part of it, is not paid during the notice period—

a

the amount unpaid is treated as an amount of tax F12or as including an amount of tax which the employer was liable to pay for that tax period under regulation 68, and

b

F16HMRC may prepare a certificate showing how much of that F7amount remains unpaid.

9

But paragraph (8) does not apply if during the notice period—

a

the employer pays the full amount of tax which the employer is liable to pay under regulation 68 for that tax period, or

b

the employer satisfies F3HMRC that no amount, or no further amount, is due for that tax period.

10

Paragraph (11) applies if the employer pays an amount F4of tax, whether separately or as part of a combined amount, which is certified under this regulation F17and which exceeds the amount the employer would have been liable to pay in respect of that tax period apart from this regulation.

11

The employer is entitled to set off the excess F5tax against any amount which the employer is liable to pay under regulation 68 for any subsequent tax period in the tax year.

12

Paragraph (13) applies if the employer—

a

delivers the return required by regulation 73(1) after the end of the tax year, and

b

pays the total net tax which the employer is liable to pay.

13

Any excess of tax paid, and not otherwise recovered by set-off in accordance with this regulation, must be repaid.

14

Regulation 218 deals with the use of certificates as evidence that sums are due and unpaid.