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HMRC internal manual

Debt Management and Banking Manual

PAYE: E-payment non composite defaults: Clerical surcharge period process

DMBM521210 told you to commence the ‘clerical surcharge period’ process at the point an employer incurs its first non-composite default.

This surcharge process may involve separate surcharge periods for each duty type.

For example, a large employer is due to pay all four-duty types (in other words, PAYE, NIC, Student Loans and CIS). The employer had no defaults prior to the start of tax year but for 2008-09 pays its:

  • CIS deductions late three times in months 2, 5 and 8
  • Fails to pay any duty on time for months 10, 11 and 12.

This means the employer ends 2008-09 with:

  • six CIS defaults
  • three defaults each on PAYE, NIC and Student Loan.

In 2009-10 the employer is again due to pay all four-duty types but:

  • pays its CIS deductions late twice in month 7 and 9
  • does not default on PAYE, NIC and Student Loan.

This means that the surcharge period has ended for the PAYE, NIC and Student Loans duty types but is continuing for CIS.

Composite surcharge calculation

Composite surcharges only apply where the employer has incurred the same number of defaults for all its duty types (in other words, composite defaults).