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HMRC internal manual

Debt Management and Banking Manual

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HM Revenue & Customs
Updated
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Debt and return pursuit: PAYE: E-payment default appeals: Appeal on the grounds that the employer is not a large employer

Employers cannot appeal against the issue of a default notice on the grounds of not being a large employer if a previous appeal against the notice to pay electronically and file on line was unsuccessful.

If you receive an appeal use EBS VIEW EMPLOYER SEGMENTATION to see if there has already been a Segmentation appeal or if an appeal is still open.

Appeal against the segmentation band

If there was an appeal against the segmentation band, and the appeal was unsuccessful:

  • issue the letter PAYE202, deleting paragraphs which are not appropriate, which explains that under Regulation 202(5) of the Income Tax (Pay As You Earn) Regulations 2003 they are not entitled to appeal on those grounds as a previous appeal has already been unsuccessful
  • ask the employer to write to you formally to withdraw the appeal
  • ensure the default count reflects the correct position see DMBM521020
  • make a note in the Notes/Actions column on the MIS spreadsheet
  • B/F for 14 days for a reply by making an entry in your Outlook calendar and setting a reminder.

There was no previous appeal and the employer appeals against the default notice on the grounds of not being a large employer

Be aware that there is a distinction between an appeal against a default notice and an appeal against a notice to pay and file electronically.

Where you receive an appeal against a default notice on the grounds of not being a large employer DMEU will need to determine this appeal. The appeal should state how many employees there were at the date that the segmentation band was determined and if not you will need to request this information before you can proceed.

If the employer has not advised the number of employees:

  • use the wording in PAYE201 deleting paragraphs as appropriate, to acknowledge the appeal and ask for the number of employees at the same time
  • make a note in the Notes/Actions column on the MIS spreadsheet
  • B/F for 14 days for a reply by making an entry in your Outlook calendar and setting a reminder.

When you have the number of employees, use EBS VIEW EMPLOYER SEGMENTATION to determine the segmentation count.

Number of employees within 20% of EBS count

If the number stated by the employer is within 20% of the number indicated by the count on EBS accept the employer’s count.

Settle the appeal by agreement under Section 54 TMA 1970 and issue the letter PAYE202 in confirmation.

You should also:

  • send a request to the relevant associated area office asking them to change the segmentation band, attaching copies of the appeal/determination correspondence as verification
  • amend the default count.

Number of employees is not within 20%

If the number of employees is not within 20% you will need to contact the relevant area office in order to assess the accuracy of the information held on the count. For example the number of employees could have been substantially reduced but forms P45(1) had not been processed when the segmentation band was determined.

If, after consultation, you decide the segmentation band is wrong:

  • settle the appeal by agreement under Section 54 TMA 1970
  • take the actions detailed above
  • issue the letter PAYE202 in confirmation of settlement.

If you are still unable to settle the appeal by agreement after receiving more information from the relevant area office, or if the employer fails to send in more evidence as requested you should:

  • advise the employer in writing of your decision to reject their appeal
  • advise them of their right to an internal review
  • advise that:

    • if they want a review, they must advise you within 30 days of the date of your letter
       
    • if they do not want a review, but do not agree with your decision, they should notify their appeal to the first tier Tribunal within 30 days of the date of your letter
       
    • if they do nothing you will treat the appeal as settled
  • B/F the case 35 days and make a suitable note on IDMS.

If no response received, proceed with collection.

If employer asks for an internal review, you should:

  • prepare a report for the review officer, clearly summarising:

    • the decision the review officer is required to review
       
    • the relevant legislation and guidance
       
    • your reasoning behind your decision
       
    • the taxpayers argument
       
    • the evidence
  • highlight the date the review was agreed and refer the case papers immediately to DMB Shipley PAYE support team.

The employer is not appealing against a default notice

You should:

  • date-stamp the appeal on the front to verify the date of receipt
  • acknowledge receipt of the appeal to the employer using letter PAYE201
  • advise which area office the appeal has been sent to for determination
  • forward the appeal immediately to the relevant area office for attention
  • make a suitable note in the Acknowledgement and Notes/Actions column of the MIS spreadsheet
  • B/F for 30 days by making an entry in your Outlook calendar to await the outcome of the appeal.

Action following settlement of the appeal

Once the appeal has been settled the outcome will determine whether or not the default count should be amended.