Alternative rights of recovery (PAYE directions): contract settlements: no direction and decision made
A contract settlement will usually be finalised before a formal direction and decision are necessary.
You should tell the taxpayer, or agent, the full recoverable amount and if the taxpayer wishes to settle you can propose a contract settlement to conclude your review of the PAYE failure in this employment.
The remuneration received and PAYE tax which should have been deducted can be declared in the taxpayer’s SA return if it is still outstanding for that year. However no repayment can be made in relation to the PAYE tax claimed in the SA return. The overall SA position for the year will not be brought up to date as a result of the settlement.
You should not delay a direction simply to obtain a contract settlement. Review any response to the opening/warning letter and if it is evident that an agreement is not going to be reached to the PAYE failure or NIC liability then the formal route of a direction and decision should be considered.