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HMRC internal manual

Employment Income Manual

Section 554Z11C: paid amounts

ITEPA 2003 – sections 554Z11C(3) and (5)

In order to complete the requirements for relief, it is then necessary to consider the payment made by the taxpayer.

Section 554Z11C(3) – the earlier charge paid amount

This applies the provisions of section 554Z11C(4) where an amount is paid in respect of the earlier charge or any late payment interest on the charge. This amount then becomes the earlier charge paid amount. It does not have to be for the full amount of the earlier charge.

Where a taxpayer makes a payment of the earlier charge, an amount equal to the earlier charge paid amount is treated as a payment on account of the Chapter 2 overlap charge. This amount may or may not clear the earlier tax liability in full. It may or may not clear the Chapter 2 overlap charge in full. It can however be used as a payment on account of the Chapter 2 overlap charge.

Where the payment of the earlier charge paid amount also clears the Chapter 2 overlap charge in full, any balance can be treated as a payment on account of any late payment interest on that charge.

Section 554Z11C(5) – the Chapter 2 paid amount

This applies the provisions of section 554Z11C(6) where an amount is paid in respect of the Chapter 2 overlap charge or any late payment interest on the charge. This amount then becomes the Chapter 2 paid amount. It does not have to be for the full amount of the Chapter 2 overlap charge.

Where a taxpayer makes a payment of the Chapter 2 overlap charge, an amount equal to the Chapter 2 paid amount charge is treated as a payment on account of the earlier charge. This amount may or may not clear the Chapter 2 tax liability in full. It may or may not clear the earlier charge in full. It can however be used as a payment on account of the earlier charge.

Where the payment of the Chapter 2 paid amount also clears the earlier charge in full, any balance can be treated as a payment on account of any late payment interest on that charge.