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HMRC internal manual

Compliance Operational Guidance

From
HM Revenue & Customs
Updated
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Supporting Guidance: employer compliance: guidance by subject: free of tax payments: FOT system in operation - checks to perform

Where you establish that a Free of Tax (FOT) system is in operation, you should

  • spot check that the amount actually paid to the employee agrees that entered at column 2 of form P11(FOT).

If the figure is less than the amount paid to the employee, you should

  • extend the check and
  • ask the employer whether the untaxed payments are intended to be paid ‘net’.

Where the employer intended to make the payments ‘net’ you should

  • explain to the employer that open years should be corrected by
  • increasing the net pay figure at column 2 of form P11(FOT) by adding the untaxed pay and consequently amending each column of form P11(FOT)
  • paying the additional tax and NIC due with the next remittance
  • seek recovery for closed years, where appropriate by following the guidance at COG913030