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HMRC internal manual

Debt Management and Banking Manual

From
HM Revenue & Customs
Updated
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Regulation 72 (5) Income Tax (Pay As You Earn) Regulations 2003: Introduction and process overview: Background

Regulation 67G and 68

Regulations 67G and 68 of the 2003 Regulations require an employer to pay to HMRC any amount of tax which the employer was liable to deduct from relevant payments made by the employer in the tax period.” So an employer is liable to pay not only the tax actually deducted from the employee’s wages, but also any tax which should have been deducted.

Regulation 72 allows tax not deducted by the employer to be recovered from the employee. It applies if it appears to HMRC that the deductible amount exceeds the amount actually deducted and Condition A is met.

The deductible amount

This is the amount which an employer was liable to deduct from relevant payments made to an employee in a tax period.

The amount actually deducted

This is the amount actually deducted by the employer from relevant payments made to that employee during the tax period.

The excess amount

This is the amount by which the deductible amount exceeds the amount actually deducted.

Condition A

Condition A is that the employer satisfies HMRC:

  • that they took reasonable care to comply with these regulations
  • that the failure to deduct the excess was due to an error made in good faith.

If these circumstances apply, HMRC may direct under R72 (5) that the employer is not liable to pay the under-deduction.

R 72(6) says that if a Direction is made, then the tax must not be added under R185 (5) or under R188 (3)(a). This means the excess is payable by the employee.