What is a determination in relation to PAYE?

Produced by Tolley in association with Ian Goodwin, Tax Director at Mazars LLP

The following Employment Tax guidance note Produced by Tolley in association with Ian Goodwin, Tax Director at Mazars LLP provides comprehensive and up to date tax information covering:

  • What is a determination in relation to PAYE?
  • Introduction
  • What types of determination are there?
  • Class 1 NIC
  • Class 1A NIC
  • Reg 80
  • Reg 110
  • What to do when a determination is received
  • How HMRC quantifies a determination
  • Time limits for HMRC to make a determination
  • More...

What is a determination in relation to PAYE?

Introduction

Determinations can be issued against an employer for a failure to operate PAYE correctly, and the under-payment of tax and NIC by the employer to HMRC. Unlike other HMRC determinations, these determinations are notissued against the taxpayer, ie the employee, but against the employer who has failed to deduct the appropriate amount of tax and NIC from the employee’s earnings.

A determination is HMRC’s formal calculation of the amount of tax that is due. These are typically only used as a last resort by HMRC when informal requests for payment of the underpaid tax have been ignored. They should be treated as serious compliance failures by the employer.

HMRC’s guidance at PAYE 54000 onwards provides very practical guidance to officers and can be very useful to an adviser when considering the steps that HMRC has taken in raising a determination. The legislation governing these determinations can be found at SI 2003/2682, Regs 72F, 80 and 110.

In this summary note, we will cover the following:

  1. what types of determination are there?

  2. what to do when you receive a determination

  3. how determinations are quantified

  4. time limits for making a determination

  5. effect of a determination

  6. interaction with other returns (self assessment and form P11D)

What types of determination are there?

There are two different forms of PAYE determination:

  1. ‘Reg 80’ for PAYE failures

  2. ‘Reg 110’ for PAYE Settlement Agreement (‘PSA’) failures

In addition, NIC has to be considered and the corresponding NIC legislation is described below:

Class 1 NIC

Determined under a separate piece of legislation ― the Social Security Contributions (Transfer of Functions, Etc) Act 1999, s 8. A decision under s, 8 is the NIC equivalent of a Reg 80 determination. Section 8 decisions can be issued for either primary or secondary Class 1 NIC underpayments, or both, caused by the employer. The decision will be made for each separate tax year with a distinct decision for primary and secondary contributions.

Class 1A NIC

If an

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