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HMRC internal manual

Compliance Operational Guidance

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

Individuals and Small Business Compliance (ISBC) 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 ISBC to ascertain if you have established sufficient facts to enable a direction and decision to be made.
  • ISBC 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 employeethe 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 ISBC

The submission must include the caseflow reference to enable the directions team to view the compliance check. If the directions team are unable to view documents saved on caseflow then the case papers will be requested.

Submissions should be sent to ISBC via the centralised mailbox:

” target=”_blank”>PAYE Directions Referrals, ISBC (ISBC SME) {#}

The referral by the caseworker should include sufficient information to enable a decision to be made, see COG931870

The submission will be allocated to a Directions caseworker who will normally confirm receipt within 15 working days, and agree a reply date with the caseworker.


Penalties for incorrect returns

See COG914030.

Claiming Compliance Revenue

See COG915690.