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HMRC internal manual

Compliance Operational Guidance

From
HM Revenue & Customs
Updated
, see all updates

Supporting Guidance: employer compliance: guidance by subject: computations: benefits in kind - employer not willing to settle employee's liability

Where the employer is not willing to meet the employees’ tax liability the options available are

  • recovery of the tax from the individuals. See COG904615 for Self Assessment employees and directors
  • for non-SA employees see COG904552.

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and

  • consideration of formal action for penalties in respect of incorrect P11Ds, COG914080 refers.

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In some cases drawing attention to these options and restating the mutual advantages outlined at COG911010 may persuade the employer to volunteer an acceptable offer.

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Where the employer is willing to settle the employees’ tax liability but declines to settle the NIC on the tax borne, you must

  • question the employer to establish the reason for the refusal
  • point out the advantages of including the amount in a contract settlement

    • there will be no requirements to identify the precise amount of tax being paid in respect of each employee
    • estimates can be used to calculate the amount of NIC due, see COG908090 onwards
    • the employer will not have to identify the relevant pay periods and provide year to date figures on the next Full Payment Submission, see COG904240.

If the employer remains unwilling to include the NICs in the contract settlement you must

  • revisit any computations based on estimates and seek actual figures on which to calculate the actual amount of tax due
  • provide written instructions as to how the employer should account for the NIC
  • consider follow up action to ensure the NICs have been accounted for via the payroll, especially where the employer has indicated there is no intention of accounting for the NICs either by contract or payroll, or
  • make a referral to RIS via the automated mailbox process for possible future action
  • include the following statement in the letter of offer immediately above Statement B

    ‘it is understood and agreed that this offer excludes any liability for National Insurance Contributions in respect of tax paid on behalf of employees’.

If the employer does not account for the NICs via the payroll you should

  • arrange to issue Section 8 Decisions, see COG915155, and
  • deal with any appeal, see COG915170.

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Contact Central Policy TAA in cases of difficulty, see COG904770.