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HMRC internal manual

Debt Management and Banking Manual

Debt and return pursuit: PAYE: in-year process: large employers

Determining the size of the employer

Each separate PAYE scheme is classified by employer size - large, medium or small - based on the number of employees on 31 October each year. This employer size then applies for the following tax year.

  • Large - 250 or more employees
  • Medium - 50 to 249 employees
  • Small - 0 to 49 employees

Contractor only XP schemes are excluded. P(SC) schemes are classified as large employers based solely on the number of employees.

A large employer is also known as a segmentation 1 employer. There are approximately 11,000 large employers.

Do not confuse large employers in this context with Band type 1 employers who pay £10,000 or more PAYE a month. Paying a large amount monthly does not always mean that an employer has more than 250 employees. The majority of large employers will also be Band Type 1 employers but this is not always the case.

Up until 2010-11, each October/November, employers would be sent segmentation notices notifying them what their employer size had been determined to be for the following tax year. As a result of the late payment penalty regime (see DMBM523500), which replaced the surcharge element of Mandatory Electronic Payments, the requirement for HMRC to issue segmentation notices notifying an employer of their size was removed. However, all employers need to recognise when they fall into the large employer segment because it is still mandatory for large employers to make their payments electronically, and to pay their monthly PAYE / NIC deductions in full and on time.

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Requirement of large employers to pay electronically

Between 2004-05 and 2009-10 large employers were mandated to pay electronically, both on time and in full. For tax years 2004-05 to 2009-10 inclusive there was a surcharge regime for large employers who did not. More information can be found in DMBM520900.

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Identifying a large employer on BROCS, EBS, ETMP and IDMS

You can identify a large employer on computer records as follows.

  • BROCS function VIEW TAXPAYER, DESIGNATORY DATA shows ‘Segmentation 1’
  • EBS function VIEW EMPLOYER SEGMENTATION shows ‘Segmentation Band 250+’
  • ETMP Tax Officer function > RTI Returns > Taxpayer Overview > RTI Registration shows ‘Segmentation Band 1’
  • IDMS function VIEW WORK ITEM and TIS will both display ‘SEGMENTATION EMP’

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BROCS Action History Codes

There is also an action history code - ‘SEGMENT - Segmentation value set or changed’ - on BROCS on VIEW TAXPAYER, Actions for large, medium and small employers.

Note: Where the segmentation value has been changed BROCS actions will reflect when this change took place but BROCS only shows the current segmentation value. EBS holds historical values.

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Appeals against segmentation type

An employer can appeal against their segmentation type and these appeals are handled by Customer Operations.

BROCS history codes on VIEW TAXPAYER, Actions will tell you if an appeal has been received and settled.

  • SEGAPP - Segmentation Appeal signal set.
  • CANSEGAP - Segmentation Appeal signal unset.

Where exceptionally an employer’s appeal against segmentation is outstanding any IDMS work item for that tax year will display on function TIS (signals) ‘APPEAL HELD’. Additionally, IDMS function VIEW WORK ITEM will show ‘Segmentation Appeal’.

More information can be found in DMBM520900.