HMRC internal manual

Compliance Operational Guidance

COG915660 - Supporting Guidance: employer compliance: guidance by subject: compliance revenue recording: status

Guidance around status is covered from COG907500 - Status.

Where a worker’s status is changed from self-employed to employed you should

  • tell the engager to register for PAYE where there is no PAYE scheme
  • calculate and pursue the underpayment for earlier years COG907620 - General Approach
  • calculate and pursue any underpayment for ‘current year’ tax periods
  • calculate and pursue interest
  • consider behaviours and penalties (COG907640, COG914045, COG914050, COG914070)
  • if appropriate, calculate any current year adjustments (see COG906590)
  • record the net amount of tax, NIC, interest and penalties to be recovered from the employer/contractor on ECS/Caseflow (no compliance revenue can be scored for any tax, Class 2 NIC or Class 4 NIC that remains undisturbed as a result of Regulation 72F guidance see COG915320 - see below where the mandate process has been applied)
  • consider and record Future Revenue Benefit where appropriate.

Note: See also COG915570 regarding non status PAYE failures.

Where it has taken some time to agree the status you should

Mandate Process followed

Where the recovery includes an amount set off against the employer’s liability from a SA repayment of an individual, only the net amount payable by the employer can be recorded.

For example

Total Tax and NIC to be recovered from the employer = £20,000
Interest due = £2,500
Penalty = £3,000
Total due = £25,500
Less to be set off from SA repayments (mandates) = £12,700
Less (informally set-off) Class 2 and 4 NIC = £700
Net amount to be recovered from the employer = £12,100
Amount to be recorded on Caseflow = £12,100