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HMRC internal manual

Compliance Operational Guidance

From
HM Revenue & Customs
Updated
, see all updates

Supporting Guidance: employer compliance: guidance by subject: compliance revenue recording: P35 omissions and PAYE reconciliations (up to and including 2012-13) - tax and NIC deducted left off the P35 and other liabilities identified

Before you follow the guidance on this page you must read COG915600 and COG915601 which provide important background information.

Where the employer has failed to include tax and NIC they have deducted on their P35, and you also identify additional liabilities which will need to be recovered from the employer, you can either:

  • obtain a supplementary return (P35 and P14s) for the tax and NIC which the employer has deducted but left off the P35 and recover the additional liabilities by way of Letter of Offer or formal determinations/decisions. The standard offer has been amended so the penalty clause covers any penalty relating to the tax and NIC the employer deducted but left off the P35 (Word35KB).
  • Alternatively you can use the same Letter of Offer to recover the omitted tax and NIC as well as the additional liabilities.

You should discuss the options with your manager and agree which approach best suits the circumstances of your case.

If you choose to obtain a supplementary return for the tax and NIC the employer has deducted, you should ask them to send the supplementary P35 and P14s electronically. To ensure that the omitted tax and NIC are added to the amounts returned on the original P35, you should advise the employer to send the supplementary return as an amendment to the original return.

Note - guidance on how to send a supplementary return online can be found on page 15 of CWG2(2012) (HMRC Website).

If exceptionally the employer is unable to send the supplementary return online HMRC can process paper returns (P35 and P14s) but this is a less efficient process so you should make every effort to encourage the employer to file the supplementary return online.

If however, paper returns are required you should

You should ask the employer to send the completed returns to you and upon receipt you should send them to Employers Office for Processing to the address below

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If you decide to include all the liabilities in a Letter of Offer any omitted tax and NIC that has already been paid and are held on BROCS should be reallocated to SAFE using the P565 procedure explained at COG915097.

If the employer is unwilling to provide a supplementary return or sign a Letter of Offer then you will have to issue regulation 80 determinations and section 8 decisions for the additional liabilities and any unpaid tax and NIC which the employer deducted but left off the P35. You will also have to raise formal penalty determinations or assessments where appropriate.

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Note: A pro forma return to reconcile the tax and NIC already paid should only be used where the employer is unwilling to provide a supplementary return or sign a Letter of Offer.

Note: You should wait for the supplementary/pro forma return to be processed before scoring the compliance revenue in ECS/Caseflow.