The Income Tax (Pay As You Earn) (Amendment) Regulations 2010

EXPLANATORY NOTE

(This note is not part of the Regulations)

These Regulations make various amendments to the Income Tax (Pay As You Earn) Regulations 2003 (S.I. 2003/2682; “the PAYE Regulations”).

Part 2 of these Regulations makes provision in relation to certain determinations by Her Majesty’s Revenue and Customs (“HMRC”). Regulations 80 and 110 of the PAYE Regulations provide that in certain circumstances, an officer of HMRC may determine amounts which employers are liable to pay to HMRC. Part 2 of these Regulations provides that Part 5A of Taxes Management Act 1970, which makes provision in relation to the payment of tax, applies in relation to such determinations.

Part 3 of these Regulations makes provision in relation to electronic communications and principally amends Part 10 of the PAYE Regulations.

It is already mandatory for large employers to make certain payments to HMRC using electronic means if HMRC has served an e-payment notice on them. Part 3 revokes the provisions on e-payment notices so that large employers will be required to make those payments to HMRC by electronic means in all cases.

It is also already mandatory for all employers to submit the return and accompanying information required by regulation 73 of the PAYE Regulations (Forms P35 and P14; “end of year return”) by an approved method of electronic communications. It is also mandatory that employers employing 50 or more employees deliver certain forms which are required during the tax year (“in-year forms”) by an approved method of electronic communications. Part 3 of these Regulations requires all employers to deliver in-year forms by an approved method of electronic communications.

Part 3 also makes various amendments to the penalty provisions in regulations 210 to 210C of the PAYE Regulations. In particular the penalties set out in Table 9A in relation to forms P45 (Part 1 or Part 3), P46 and P46 (Pen) now apply for the tax years ending 5th April 2012 and 5th April 2013. Also a new penalty table is inserted, Table 9AA, in respect of the same forms but for the tax year ending 5th April 2014 and subsequent years.

In addition, Part 3 of these Regulations makes some amendments to other parts of the PAYE Regulations that are consequential on the amendments detailed above; and regulation 17 includes a clarification amendment.

The amendments made by these Regulations come into force on 6th April 2010 but take effect at different times as set out in regulation 1.

A full Impact Assessment of the effect these Regulations (excluding regulations 3, 13 and 17) will have on the costs of business and the voluntary sector is available on the HMRC website and is annexed to the Explanatory Memorandum which is available alongside the instrument on the OPSI website.

A full Impact Assessment has not been produced in relation to regulations 3, 13 and 17 of this instrument as no impact (regulation 17) or a negligible impact (regulations 3 and 13) on the private or voluntary sector is foreseen.