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HMRC internal manual

Compliance Operational Guidance

HM Revenue & Customs
, see all updates

Supporting Guidance: employer compliance: guidance by subject: computations: introduction

A computation of duties underpaid is to be prepared for issue to the employer/contractor in all cases where inaccuracies are discovered that may lead to a recovery situation regardless of the method of recovery.

Because there are

  • numerous methods in determining amounts liable and
  • various types of inaccuracy

it is difficult to lay down hard and fast rules regarding the content, layout and preparation of computations. However, one principle that must be applied to all computations is that there must be no indication that some inaccuracies are viewed less seriously than others.

Computations should be based on the actual amounts of additional

  • earnings
  • benefits
  • unpaid deductions

identified from the employer’s/contractor’s records. However in certain circumstances computations can be estimated (COG908090).

Employer Compliance Laptop Settlement System (ECLSS)

This is a computational tool available for use by EC and is available via TSS2000. Use of this tool will provide a level of consistency in preparing computations. It also has the capability of providing computations for

  • PAYE
  • basic or higher rate tax, or a mix of both
  • a % of liable taxpayers for instance in cases where it is agreed that expenses are 60% taxable and 40% allowable
  • class 1 NIC (depending on the category)
  • class 1A NIC
  • grossed up tax
  • NIC on tax borne
  • interest calculations

ECLSS will also

  • facilitate quick and easy amendments to computations which also change interest accruing automatically
  • provide prints in an easy to read style (suitable for issue to an employer/contractor)

A users’ guide is available on the intranet via the library.

It is recommended that you use ECLSS in preparing computations

In cases of difficulty or doubt in preparing a computation you should

  • consult the manager.