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HMRC internal manual

Compliance Operational Guidance

Supporting Guidance: employer compliance: guidance by subject: compliance revenue recording: recovery methods

The principles of compliance revenue recording apply regardless of which method of recovery is used.

Up to and including 2012-13, where a year remains open you should

  • collect any outstanding returns (appropriately corrected)
  • collect any underpayment and
  • arrange for the returns to be processed.

From 6 April 2013, where a tax period remains open you should instruct the employer to submit

  • a Full Payment Submission (FPS) reporting the total correct year to date pay, tax and NIC information (see COG904250)
  • an Employer Payment Summary (EPS) to report the total correct year to date figures for all recovered payments.

From 6 April 2013, where a year remains open and the employer is required to report in real time, you should instruct the employer to submit

  • the correct year to date information on an Earlier Year Update (EYU), see COG904240.

This will

  • facilitate the updating of both the tax and NIC record of the individual and
  • enable DMB to purse any underpayments that cannot to be collected as part of the compliance check.

If it is not possible to collect the outstanding returns and/or the employer does not correct the inaccuracies on an FPS, EPS or EYU as instructed, you should

  • document the reasons why on the papers
  • recover the underpayment by

    • Class 6 contract settlement or
    • formal determinations
  • take appropriate action to update the individuals National Insurance records, see COG908097.

Where underpayments would usually be collected by another section are being included in the contract settlement you must

  • inform the appropriate section (for example DMB, Employer Office (NIC&EO) )
  • make sure that duplicate action is not undertaken.

For example, where fixed penalties have been issued via ECS but the employer/contractor wishes to make payment as part of the contract settlement you must notify the Employer Office and request that ECS is inhibited.

There are several recovery methods within the Caseflow Systems. You must 

  • make sure that compliance revenue is recorded against the correct recovery method.

Some compliance checks may involve more than one recovery method. This should be reflected within Caseflow.