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HMRC internal manual

Compliance Operational Guidance

HM Revenue & Customs
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Supporting Guidance: employer compliance: guidance by subject: settlement: recovery of tax and/or NIC from a director or employee - action to be taken

Action by Caseworker

Employment Status & Intermediaries (ES&I) will consider all cases.

Prior to submitting the case you should have established that the employer cannot pay the PAYE/NIC liability.

You should be satisfied that

  • relevant payments have been received and you have established whether
  • an under-deduction of tax has taken place (and/or) the employer has failed to pay the employees primary Class 1 NIC
  • the tax/employee’s primary Class 1 NIC remains unpaid.

You should have reasonable grounds for believing that

  • there has been a wilful (deliberate) failure to deduct by the employer
  • the employee involved was aware of that wilful failure.

If you have any doubts about making a direction

  • contact ES&I or SI to ascertain if you have established sufficient facts to enable a direction and decision to be made.
  • ES&I/SI may ask you to send the case to them.

Information to be provided by the caseworker

Your submission should include sufficient basic information to enable a relatively quick decision to be made. The information should include:

The background to the case

  • outlining why untaxed amounts are to be regarded as relevant payments.

The employee’s background covering

  • the position held in the company
  • the part played in the management of the company and the control of its finances
  • any other information relevant to the employee’s knowledge of PAYE or the employee’s knowledge of its operation by the company.

A schedule including, for each year and/or tax period

  • the total amount of relevant payments received by the employee
  • the amount of untaxed relevant payments
  • the tax and NIC under-deducted
  • relevant payments of tax/NIC deducted and already accounted for:

    • on forms P35/P14 (up to and including 2012-13)
    • on a Full Payment Submission (from 6 April 2013) or
    • in Regulation 80 determinations.

Referrals to  {#IDAN4SPE}ES&I

Referrals should be sent to ES&I via the centralised mailbox SEC, Postbox (LocalCOMP I & PB Specialist Employer Compliance) using the PAYE Direction work referral stencil. The case will be allocated to a Directions HO (DHO). The caseworker will be advised by email who to send the case to and where they are based. The DHO will confirm receipt of the file by email and will normally reply within 15 working days to inform you how they intend to proceed with the case.

See LC Memo 14/11.

Referrals to SI

Your submission should be sent with all available files and your investigation papers to the SI team nearest to the employer’s principal place of business (details of locations can be found on the Specialist Investigations (SI) website).

SI will notify you of the outcome once the full facts are known, considered and appropriate action taken.

See INS8310 for more information.

Penalties for incorrect returns

See COG914030.

Claiming Compliance Revenue

See COG915690.