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HMRC internal manual

Compliance Operational Guidance

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HM Revenue & Customs
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Supporting Guidance: employer compliance: guidance by subject: compliance revenue recording: repayments stopped

Compliance revenue can in some instances be scored where HMRC stop or recover an incorrect repayment claim.

Some examples of this are:

Amended return and payment request

Employer Office (NIC&EO) will make a referral to the Employment Status & Intermediaries (ES&I) Team in accordance with PAYE47065 where an employer submits an amendment to a return with a repayment request because

  • the employer states that the ‘IR35’ legislation does not in fact apply to a particular engagement or engagements, or
  • the directors or employees have agreed

    • to repay wages and salary to the company
    • not to draw amounts of salary that have been subjected to PAYE and the net credited to the Director’s Loan Account
    • to repay salary / wages and take dividends instead.

ES&I will follow the guidance at EIM42710. Where the direct action taken prevents a repayment being made you should

  • register on Caseflow as

    • Compliance check type - Other Compliance Check
    • Inaccuracy category - Other authorised by CC and
  • score the amount that would have been repaid had the application been successful using the recovery category

    • P35/CIS36/CIS 300 obtained

and consider Future Revenue Benefit (see COG915640) as appropriate.

If when you check the employer’s action you find that a repayment has been made in error, you should

  • register on Caseflow as

    • Compliance check type - Other Compliance Check
  • calculate and pursue any underpayment of tax and NIC
  • calculate and pursue interest
  • consider behaviours and penalties see COG914070 
  • recover the amount due by a Class 6 contract settlement
  • consider Current Year adjustment and Future Revenue Benefit where appropriate (see COG915640).

If the case is being worked in ECS

  • record the amount of the recovered underpayment on ECS

    • in LC as an employer amendment
    • in LB as a partial review
  • claim the amount of the underpayment, interest and penalties as Broader Coverage code R15.

Examples

Status

A person may make a request for a repayment on the grounds that they have been incorrectly treated as an employee and the operation of PAYE was not appropriate as the person is self-employed. If a compliance check is undertaken and the result of the check is that

  • the worker is correctly employed and
  • the repayment is refused

you should,

  • in Caseflow score the amount that would have been repaid as

    • Compliance Check type - Other Compliance Check
    • Inaccuracy Category - Employment Status.

For cases working in ECS score the amount that would have been repaid had the application been successful, as Broader Coverage under code R15.

PAYE Settlement Agreement

In 2007 / 2008 an employer submits a PSA and calculation which is subsequently paid. In April 2009 the agent identifies an item within the PSA which they consider to be either exempt or trivial and request a repayment.

If the repayment request is challenged which stops the repayment, you should

  • score the amounts that would have been repaid if a challenge had not been made and
  • score a current year adjustment for the amounts that will correctly returned in 2008 / 2009.

You should

  • register case on Caseflow as

    • Compliance Check type - Other Compliance Check
    • Inaccuracy category - Other authorised CC
  • consider Future Revenue Benefit where appropriate (see COG915640).

The aforementioned examples should not be taken as an exhaustive list. However the principles applied within the examples should be used as the basis of Broader Coverage claims in respect of any repayment requests.