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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 Employment Status & Intermediaries (ES&I) PAYE Directions Caseworkers involved with the following alternative rights of recovery and other Local Compliance caseworkers who need to refer cases to ES&I

  • 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)

In the guidelines which follow it is assumed that cases are submitted to ES&I for consideration by

  • Local Compliance
  • Specialist Investigations
  • Debt Management Banking (DMB)
  • Enforcement Insolvency Services (EIS)
  • Official Receiver/Insolvency Practitioner.

ES&I caseworkers

  • The SO authorised officer will supervise the work of the caseworker.
  • Directions and decisions are made by officers authorised in that role.

Referring caseworkers

  • The caseworker remains responsible for the conduct of a case.
  • Routine procedures are undertaken by caseworkers under guidance of the ES&I caseworker. See Local Compliance Memo 14/11 for details of ES&I caseworkers.