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HMRC internal manual

Compliance Operational Guidance

Supporting Guidance: employer compliance: guidance by subject: open year inaccuracies: claim for accepting less than the full employer liability

If you tell the employer to prepare or adjust open year records, computing the tax they are due to account for at Basic Rate or Emergency Code Wk1/Mth1, and the employer

  • claims that the employee’s tax liability should be less for example in the case of

    • a part time worker with no other employment
    • a student in full time education

you should

  • consider if there is sufficient evidence to support the claim.

Sufficient evidence is only likely to be available where the employer has kept a record of employees’ names and addresses. However any evidence the employer provides should be considered on its merits.

If you are satisfied that the employee’s liability is less than that legally due because records have been kept you should

  • tell the employer to calculate the actual liability and
  • report year to date pay, tax and NIC details on the next Full Payment Submission (FPS).

If records are inadequate and a liability is still due, you should

  • calculate the amount the employer was legally required to deduct had the correct procedure been followed, and
  • include in a Class 6 settlement (COG906600).

If no liability is due you should tell the employer:

for all payments to

  • prepare a DWS/payroll record and
  • include the employee on the next FPS making sure that year to date pay, tax and NIC details are reported.

Where similar inaccuracies are discovered during a further compliance check you must still

  • treat any claim by the employer for reduced liability on its merits and follow the procedure outlined above.