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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: in-year process: quantification: amounts to quantify

Starting point

You must quantify

  • the amount due for the full tax year, 6 April to the 5th of the month immediately before your visit. This is regardless of how many payments have been received. But bear in mind that if the employer is a limited company who carries out work in the construction industry and they suffer CIS deductions on the amounts they receive, they are able to set-off these amounts against their monthly or quarterly payments to HMRC. This will need to be taken into account after you have quantified the amount due.

There only exceptions to a full quantification are

  • new employers who start up during the year; quantify from date employment started
  • administrator schemes; quantify from the start of administration
  • where there has been a previous quantification; quantify from the date after the last quantification end date.

In most quantifications you will need to quantify to the last pay day prior to the 5th of the month before your visit. However where a Company Administration Order is in force or the employer has ceased you should quantify up to the last date of employment.

Establish the payday

For an accurate quantification, you must work out the exact number of pay days in each tax month.

If the employer runs a monthly payroll, there will only be one pay day in each month. For example if the pay day is the 27 June, payment will be due for the period 6 June to 5 July, which is month 3.

If the employer pays weekly, fortnightly or quarterly, you must find out the actual pay day as it could fall on any day of the week.

It is important that you follow this process as the quantified amount is an established debt figure and will be used to enforce the debt.

Months overdue or not yet due

At the quantification visit, you need to establish which months are due and which months are not due.

PAYE deductions are due by 19th or 22nd of each month, depending on whether the employer/contractor pays manually or electronically.

If an employer is visited after the 19th or 22nd of the month, all payments up to and including the 5th of that month are overdue.

If an employer is visited after the 5th of the month but on or before the 19th or 22nd (the Grace Period), that month may be quantified but is not yet overdue.

Example 1

A quantification visit takes place on 5 October 2008

  • all months up to 5 September due 19/22 September are overdue
  • month ending 5 October is not overdue until 20/22 October.

In this case your quantification needs to show Months 1-5 separately from the month not yet due, for example.

  • months 1-5 (6 April to 5 September) each month must be separately recorded as ‘overdue period’

 

  • month 6 (6 September to 5 October) as ‘not yet overdue’.

Example 2

A quantification visit takes place on 4 October 2008

  • all months up to 5 September are overdue.

In this case only one quantification needs to be prepared.

  • month 1-5 (6 April to 5 September) - overdue period
  • the period 6 September to 4 October does not make a complete tax month and therefore should not be quantified, unless the company has ceased or is subject to a CAO.

Note: If you call within the grace period (6-22nd of the month) you may have to do two quantifications. The overdue period is enforceable straight away and the not yet overdue will be enforceable when the due date has passed.