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HMRC internal manual

Debt Management and Banking Manual

Interest: Interest Review Unit (IRU): PAYE and National Insurance Contributions: PAYE Settlement Agreements (PSA)


A PSA can be entered into or amended, any time before 6 July following the end of thetax year to which the PSA applies. The PSA agreement is controlled by ‘Regulation 80H’ andis made on a form ‘PS626’.

Once signed by the authorising officer, a copy of the PS626 should be sent to the employeralong with a letter that tells the employer the date by which the following details mustbe provided

  • The value of the items included in the agreement on which tax and Class 1B NIC is chargeable.
  • The total number of employees receiving each specified amount.
  • The number of those employees chargeable to each specified rate of tax.
  • A calculation of tax and Class 1B NIC.

When a full response is received to the PS626 a notice to pay and payslip is sent tothe employer

The aim should be to send notice to pay and payslip to the employer before 19 Octoberfollowing the year concerned.

Where there is a delay, beyond 19 October, in the agreement of the amount and sending thenotice to pay, the employer should be asked to consider making a payment on account tominimise the interest bill.


Payments of tax and NIC can be made at any time after the agreement is signed. Thefinal due date for payments is 19 October (22 October for payments made by an electronicpayment method) following the year to which the PSA applies.

Objections to Interest

There should only be two types of interest objection made in PSA cases.

  • Where HMRC caused unreasonable delay; or
  • The EDP of a set-off is incorrect.

An Employer may object to interest being charged because HMRC were late sending theform ‘PS626’ and letter, or the notice to pay and payslip preventing them from makingpayment on time.

It is the employer’s duty to supply the details shown above, including the amount to bepaid. So there is no excuse for them not paying the amount, they show as due, by theappropriate due date. This is whether or not HMRC have sent the form ‘PS 626’ or notice topay and payslip.

It will only be in extreme circumstances that HMRC will consider a claim of unreasonabledelay on our part.

Where it is evident that there may have been unreasonable delay by HMRC, consider givingup interest in line with the guidance given at DMBM405010.

An employer may object because they disagree with the EDP given to a repayment set-off.Consider this in line with the guidance given at DMBM405010.