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HMRC internal manual

Debt Management and Banking Manual

Pre-enforcement: coding out: in-year and end-of-year reconciliation

In-year reconciliation


  • conducts in-year reconciliation if there is a change of circumstances; for example, a cessation case
  • sends to the Head of Duty (HoD) system details of amounts collected in the form of a credit
  • adds accounting entries onto the customer’s account
  • updates the Contact History
  • conducts the end-of-year reconciliation and will determine if all the debt has been collected
  • issues a P800 Tax Calculation to the customer, where appropriate.

NPS(PAYE) in-year reconciliation will:

  • prioritise amounts owing in the following order:

    • PAYE underpayments
    • SA balancing payments
    • SA debt in order of receipt
    • tax credit debt in order of receipt
  • include the coded out debts in the calculation after the result for the year in isolation has been calculated
  • determine how much if any of the debt has been collected
  • update accounting entries on NPS(PAYE)
  • send HoD system details of amounts collected
  • update Contact History on NPS(PAYE).

A P800 (tax calculation) will:

  • only be issued if the overall result is a PAYE underpayment or overpayment of tax and it will identify whether a debt has been collected or not
  • not be issued to demonstrate settlement or non-settlement of the debt if the overall result balances.

NPS in-year reconciliation - unemployment repayments

Where a debt has been coded and the employment ceases, the debt will remain in the code and guidance at PAYE94025 and PAYE94060 will continue to apply.

End-of-year reconciliation

NPS end-of-year reconciliation

If the taxpayer does not have a SA tax liability, end-of-year reconciliation takes place in NPS(PAYE) only.

Where the taxpayer is also in SA, NPS(PAYE) does not perform the reconciliation; this takes place in SA on receipt of the SA return. When SA has completed reconciliation, it passes details to NPS(PAYE). NPS(PAYE) will update accounting entries including details of the debts sent to NPS(PAYE) for collection and send an appropriate credit to SA or tax credits.

Full details of this process are covered in PAYE14010.

SA end-of-year reconciliation

In SA reconciliation, the order of priority for the allocation of PAYE tax deducted at source (P60 figure) is:

  • coded out debts first
  • any balance of PAYE tax in excess of the debt is available to reduce the SA liability; this is done automatically in the SA tax calculation.

Further details of SA reconciliation can be found at DMBM618565.

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View reconciliation details on NPS(PAYE)

There are no changes to the PAYE Tax Calculations Results Screen for debts. Collected debt information is displayed in the ‘Outstanding Debts Summary Screen’ with a status of ‘Collected’.