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HMRC internal manual

Debt Management and Banking Manual

From
HM Revenue & Customs
Updated
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Debt and return pursuit: PAYE RTI: submissions and charges: Earlier Year Update (EYU)

An employer can correct any errors or omissions by submitting a correction FPS at any time up to and including the 19 April following the end of the tax year in which the error or omission occurred.

After the 19 April RTI will not accept an FPS relating to an earlier year and the error or omission has to be corrected by the submission of an EYU. EYU information can be submitted for up to six years after the end of the tax year.

When submitting an EYU it is important that the employer understands that the submission should only show the difference between the amount already submitted for the individual employee and the correct figure as a plus or minus.

The correction figures submitted will be added or subtracted from any figures we already hold so it is vital that the correction does not report the year-to-date figures as this will result in an incorrect charge position. The only exception to this is where the employer has not submitted any previous information for the tax year then the EYU should show the total payments for the year.

When an employer needs to correct an earlier EYU they submitted, the submission must only show the amount of the change from the last submitted figure held – the latest EYU they submitted.

For example, if the employer submits a year to date figure of £1,000 for pay on the last FPS for the year for an employee, then after the 19 April realises that the figure should have been £1,100, they would submit an EYU to show ‘+£100’ for that employee. When the EYU is processed this would amend the overall figure to £1,100. If the employer then realised that the actual figure should have been £1,050, the employer would need to submit another EYU to show ‘-£50’.  This -£50 would then be taken from the latest charge we hold of £1,100 resulting in the correct charge of £1,050.

How these corrections appear on ETMP depends on which year is being corrected and whether an FPS has been received for month 12.

2012-13 and 2013-14

For 2012-13 and 2013-14 any EYU return received after 19 April following the end of the tax year is treated as an amendment to the month 12 charge or last active month in the that tax year.

EYU postings on ETMP

The way that ETMP processes and displays the EYU depends on whether a month 12 FPS has been received and whether the EYU increases or reduces the tax and NIC due from the employer.

Month 12 FPS received

Where the month 12 FPS has been submitted, the amounts reported on an EYU are added to or deducted from the year-to-date figures reported on the month 12 FPS.

Month 12 FPS not received

If the month 12 FPS has not been submitted, the EYU reverses any specified charge for month 12. The tax and NIC reported on the EYU are added to, or subtracted from, the year-to-date figures reported on the last FPS received, to calculate the total tax and NIC due for the tax year. The updated year-to-date figures are then used to create an ‘actual’ month 12 charge.

Credit resulting from an EYU submission

Where the EYU results in a month 12 charge being a credit, the credit is allocated against the most recent charges first.

Where the existing month 12 charge has been paid and the EYU generates an overpayment, the amount overpaid is allocated to the earliest outstanding liability in accordance with existing payment allocation rules.

Examples of how ETMP processes and displays the EYU posting are shown in the following tables.

With an FPS at month 12

Month 12 position at 19 April EYU amount Month 12 charge postings on ETMP following processing of the EYU
Month 12 FPS creates return charge of £1,200. £600 Return charge (FPS) £1,200

Reversal -£1,200

Return charge (FPS+EYU) £1,800      
  Month 12 FPS creates return charge of £1,200. -£150 Return charge (FPS) £1,200

Reversal  -£1,200

Return charge (FPS - EYU) £1,050      
  Month 12 FPS creates return charge of £1,200. -£1,750 Return charge (FPS) £1,200

Reversal  -£1,200

Return charge (FPS - EYU) -£550

Without an FPS at month 12

Month 12 position at 19 April EYU amount Month 12 charge postings on ETMP following processing of the EYU
Month 11 FPS year-to-date tax and NIC due £12,210.    
Specified charge raised for £1,110. £600 Specified charge £1,110

Reversal -£1,110

Return charge (EYU) £600  
  Month 11 FPS year-to-date tax and NIC due £12,210.
Specified charge raised for £1,110. -£150 Specified charge £1,110

Reversal -£1,110

Return charge (EYU) £-150

2014-15 and following years

Changes to the way ETMP calculates EYU charges

Changes to the penalties legislation means that for 2014-15 and subsequent years, the way the EYU adjustments are treated depends on the type of charge held for the last active month for the tax year.

How an EYU changes the YTD figure

When an EYU is submitted, the value on the EYU is added to or subtracted from the latest year-to-date (YTD) figure to give a new YTD.

How the charge is raised if the last active month has an FPS charge

If the last active month for the tax year is based on figures from an FPS and the EYU:

  • increases the YTD, ETMP records this as a separate EYU charge
  • decreases the YTD, ETMP deducts the amount of the decrease from the last active month and reduces that charge; this applies even if the EYU decreasing the YTD is received after an EYU increasing the YTD.

The following examples illustrate the effects of an EYU where the last active month was an FPS.

£1,000 underpayment for 2014-15 month 12
EYU received increasing YTD; underpayment should be £2,200
£1,000 underpayment month 12 remains on record
EYU charge created for £1,200

£1,000 underpayment for 2014-15 month 12
EYU received reducing YTD; underpayment should be £800
£1,000 underpayment month 12 reduced to £800

£1,000 underpayment for 2014-15 month 12
EYU received increasing YTD; underpayment should be £2,200
£1,000 underpayment month 12 remains on record
EYU charge created for £1,200
Further EYU received reducing YTD; underpayment should only be £800
Overall reduction is £1,400
£1,000 underpayment month 12 reduced by £1,000
EYU charge is credited with £400 to reduce charge to £800

How the charge is raised if the last active month is a specified amount

If the last active month for the tax year is a specified amount and the EYU:

  • increases the YTD, ETMP reverses the specified and creates an actual charge to match the specified figure and creates a further charge for the increase
  • decreases the YTD, ETMP reverses the specified and creates a charge for the actual amount.

The following examples illustrate the effects of an EYU where the last active month was a specified amount.

£1,000 specified for 2014-15 month 12
EYU received and month 12 should be £1,200
Specified reversed to nil
Month 12 underpayment charge created for £1,000
EYU charge created for £200

£1,000 specified for 2014-15 month 12
EYU received and month 12 should be £800
Specified reversed to nil
Month 12 underpayment charge created for £800

How the EYU charge is recorded if there is no YTD figure for the tax year

Where an EYU is received but there is no YTD on record, ETMP processes the EYU in the same way as if the last active month was a specified amount. Where this results in the last active month being negative, ETMP posts a credit for that month.

Due and payable date for EYU

The due and payable date for an EYU charge is usually 19/22 April and interest accrues from that date. However, if the employer has ceased during the year and then submits an EYU, the due and payable date will be the 19/22 of the month of cessation.

How the EYU charge is shown on IDMS

Due to the different ways in how the EYU is calculated for 2014-15 and subsequent years, IDMS displays the 2012-13 and 2013-14 EYU charges differently from the 2014-15 and subsequent years’ EYUs.

2012-13 and 2013-14

The EYU work item on IDMS is a month 12 in-year RTI underpayment work item. The reference is in the format “123 P 1234567 YYYYUn MM” where:

  • 123 P 1234567 is the Accounts Office PAYE reference
  • YYYY is the tax year
  • U represents underpayment
  • MM is the monthly instalment (for EYU this will normally be 12).

From 2014-15

IDMS creates a specific EYU underpayment work item. The reference is in the format “123 P 1234567 YYYY EY NN” or “123 P 1234567 YYYY EZ NN” where:

  • 123 P 1234567 is the Accounts Office PAYE reference
  • YYYY is the tax year ending
  • EY and EZ represents EYU charge
  • NN is the instalment from 01 to 99.

Once an EYU charge created in ETMP becomes overdue, the underpayment is sent to IDMS and an EYU underpayment is created. Multiple EYU charges can be sent for a tax year. IDMS creates separate work items for each EYU underpayment received.

This work item is interest-bearing. Once the relevant charge has been paid in full, IDMS accepts the corresponding interest charge. The work item type is the same as the corresponding charge but with an interest indicator of ‘X’.