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HMRC internal manual

Compliance Operational Guidance

Alternative rights of recovery (PAYE directions): general: introduction

This section of the Compliance Operational Guidance is for the use of PAYE directions caseworkers and other compliance caseworkers looking to use the following legislation to obtain an alternative right of recovery

  • directions under Regulation 72(5) Condition B / Regulation 81(4) Conditions A or B of the Income Tax (Pay As You Earn) Regulations, SI2003/2682
  • decisions under Section 8 Transfer of Functions Act 1999 in relation to the circumstances provided for in Regulation 86(1)(a)(ii) of the Social Security (Contributions) Regulations, SI2001/1004.

PAYE and NICs legislation require an employer to pay over to HMRC the PAYE and NICs due on the earnings of an employee. That liability to pay remains whether or not the employer actually deducted PAYE and NICs from the employee’s earnings. Provided the liability can be recovered from the employer, HMRC will not usually consider trying to recover it from someone else. But alternative rights of recovery, where the debt is effectively transferred to another person, will be considered where

  • PAYE/NICs were not paid over and neither was the PAYE deducted
  • (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
  • the failure to deduct the PAYE or pay over the NICs was wilful (that is, deliberate) and within the knowledge of the employee
  • (This content has been withheld because of exemptions in the Freedom of Information Act 2000)

Referring caseworkers

  • customer compliance caseworkers who have cases which look suitable for alternative rights of recovery should make a submission to the PAYE directions team to consider via the mailbox, see COG915200
  • the referring caseworker will continue to work the case under the guidance of the PAYE directions caseworker
  • directions in respect of tax and decisions in respect of NIC can only be made by officers authorised in that role, once a PAYE directions caseworker is satisfied that the criteria for a direction and decision have been met.