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HMRC internal manual

Compliance Operational Guidance

Supporting Guidance: employer compliance: guidance by subject: commencing the compliance check: pecuniary liabilities and benefits

You must establish

  • the types of benefits provided, and
  • to whom they have been provided.

This information should be gathered during the talkthrough and you should

  • refer to the help available in the EC Testbank.

You must then confirm

  • whether they have been correctly returned on form P11D or have been voluntary payrolled
  • Class 1A NIC has been correctly accounted for on form P11D(b)
  • Class 1 NIC has been correctly accounted for on forms P35 and P14 (up to and including 2012-13)
  • Class 1 NIC has been correctly accounted for on a Full Payment Submission (FPS) (from 6 April 2013) see COG904240.

Where you identify that a PAYE Settlement Agreement (PSA) is not in place, but you consider that one would be beneficial, you can invite the employer to consider whether they would benefit from using a PSA, see COG907200.


It should be made clear to the employer that a request for copies of the directors loan account and questions about whether this is overdrawn are directed for

  • tax purposes

    • to check that PAYE has been operated correctly and
    • to check that any S175 benefit has been correctly included on the form P11D COG930040
  • NIC purposes

    • to establish how the account is funded to determine if any NIC liability exists.