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HMRC internal manual

Debt Management and Banking Manual

HM Revenue & Customs
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Debt and return pursuit: miscellaneous charges: PAYE Settlement Agreements, Regulation 110 Determinations and Class 6 Voluntary Settlements (Restitutions)

PAYE Settlement Agreements (PSAs)

From 1996-97 onwards Employers Sections and employers can meet the tax payable on certain employees’ expenses they provide to their own employees under a PAYE settlement agreement (PSA).

This is a voluntary agreement between the employer and HMRC. Once a PSA is signed for a tax year the employer does not need to enter those benefits on forms P11D or operate PAYE on them. The value of these expenses and benefits are totalled at the year end and the tax payable by the employer is agreed on a grossed-up basis called a PAYE Settlement Agreement (PSA). Benefits and expenses included in an agreement must be minor, paid on an irregular basis, or in practice difficult to operate PAYE on or include on the P9D or P11D forms. The PSA charge is:

  • informal, reflecting the voluntary nature of these agreements, but are enforceable as if it were a tax charge on the employer
  • raised and accounted for on SAFE
  • payable by the due date, 19 October following the end of the relevant year (for example, a PSA for 2001-2002 is payable by 19 October 2002).

Regulation 110 determinations

If an agreement about the amount of tax due under the PSA cannot be reached with the employer, a determination will be raised under Regulation 110 of the Income Tax (Pay As You Earn) Regulations 2003. This too is accounted for on SAFE.

Further information about PSAs can be found in the `PAYE Settlement Agreements Manual’.

SAFE action

More than £100,000

Where the total charges on the account are greater than £100,000, SAFE will send charges straight for local action at the due date + 1.

£100,000 or less

Where the total charges on the account are for £100,000 or less SAFE will:

  • make two applications for any unpaid amount (whether an informal agreement or a formal Regulation 110 Determination) and if unpaid will
  • pass the items automatically to IDMS for local recovery action.


Under Regulation 115 of the Income Tax (Pay As You Earn) Regulations 2003 interest is due on any PSA tax included in an informal settlement agreement charge or tax due by a formal determination if it is not paid by the due date. It is possible to have two interest charges for the same year, where both informal and formal charges have been raised.

SAFE will raise any interest charges where payment in full is made and apply for payment accordingly. If the interest charge remains unpaid SAFE will pass the items to IDMS for local recovery action.



Generally, recovery and enforcement of PSA charges is dealt with by the High Risk and Complex Case (HRCC) unit.

PSA charges are recoverable under Regulation 109 of the Income Tax (Pay As You Earn) Regulations 2003 and are subject to the provisions of Part VI Taxes Management Act 1970 as if they were income tax charged on the employer.

Payment can be enforced by normal methods.

Regulation 110

A Regulation 110 determination is subject to the provisions in Parts IV, V and VI of the Taxes Management Act 1970 as if it were an assessment for income tax charged on the employer. Normal appeal procedures apply and you can enforce payment by any of the normal methods.


Interest arising from either an informal charge or a Regulation 110 determination can be recovered from the employer in similar manner to tax that has been assessed upon the employer.

Voluntary Settlements (Restitution)

You may also occasionally come across charges on the SAFE Local Action worklist described as Class 6 Voluntary Settlements (also known as Voluntary Restitution). As the name implies, these are voluntary, and is an agreement by the employer to settle liabilities which are normally the employees’. These charges are not enforceable.

When the employer makes a voluntary settlement, the charge will be accounted for on SAFE, but only when payment is received. No recovery action should be necessary for these charges as there should never be an outstanding debt.

However, if for whatever reason - such as the payment being dishonoured - there is an outstanding debt on these charges, an entry will appear on the SAFE Debt Management TO Local Action worklist. When this happens the Debt Management TO should ask the charge raiser to either:

  • contact the employer for a replacement cheque
  • vacate the charge as applicable.