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HMRC internal manual

Compliance Operational Guidance

Supporting Guidance: employer compliance: guidance by subject: settlement: direction under regulation 72F: action by caseworker - trigger letter of offer

Once you have agreed that a direction under Regulation 72F is appropriate (COG915285) and noted the individual’s SA record (COG915290) you should

  • issue a cpomputation to the employer showing the total amount of PAYE and NIC underpaid before any set off
  • notify the employer/contractor that a direction will be considered
  • ask the employer/contractor to confirm in writing, that they agree the PAYE and NIC included in the computation
  • confirm the employer/ontractor wishes to process to settlement.

You should point out to the employer/contractor that even if a direction is made

  • the employee has a right of appeal against the direction
  • the employer has no such right.

Receipt of an agreement letter from the employer/contractor will be considered as a ‘trigger letter of offer’ for the purpose of trigger events under Regulation 72E 5(d) and 72E (6).

Note: A letter of offer in the context of this legislation should not be confused with a letter of offer used to settle the case by way of a contract settlement. We have therefore called this letter of offer a ‘trigger’ letter of offer.

Where the employer/contractor seeks advice on how to word such a letter you should provide the following:

I/The company/The partnership*………………………………………. (name of employer) acknowledge(s) HMRC’s computation dated……….of PAYE/National Insurance Contributions/CIS deductions underpaid following the review of my/our* records.

I/We* accept the amount shown is correct and now wish to proceed to settlement.

I/We understand that this letter constitutes a ‘trigger event’ that may allow a direction to be made under Regulation 72F of The Income Tax (Pay As You Earn) Regulations 2003 reducing the amount of tax owed.

Due to confidentiality you should not disclose to the employer any details of the individuals’ self-assessment.

If the employer refuses or is reluctant to provide a ’trigger’ letter accepting the liability and you have to issue a Regulation 80 determination, see COG915296.