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HMRC internal manual

Employment Income Manual

Relevant steps taken to make payment in respect of a tax liability

ITEPA 2003 – Section 554XA

It is not intended that the making of a payment of a tax liability should give rise to a charge under Pt 7A where the liability arises due to an arrangement in pursuance of which the step is taken.

There are 2 ways in which such a payment could be made. The legislation introduces the concept of a relevant tax payment. A relevant tax payment can be made directly by a third party to HMRC or the third party could make a payment to a person to enable them to pay their own liability.

No charge will arise under Pt 7A provided either:

  • the relevant tax payment is made directly to HMRC by a third party


  • the payment is made to the employee so that they can make a relevant tax payment; and
  • the employee pays HMRC an amount equal to the payment from the third party; and
  • the payment to HMRC is made before the end of the 60th day from the date of the original payment by the third party

The relevant tax payment must be a payment to HMRC in respect of a liability for:

  • Income Tax (for relevant steps taken between 6 April 2017 and 20 July 2017)
  • National Insurance contributions (NICs) (for relevant steps taken between 6 April 2017 and 20 July 2017)
  • Corporation Tax
  • Inheritance Tax

The liability must arise in relation to the relevant arrangement in respect of which the relevant step is taken. If the payment is in respect of an unrelated liability, the exclusion will not apply.

Section 554XA(5) requires an application to made to HMRC to consider whether a liability may be treated as arising in respect of a relevant arrangement. HMRC will only consider liabilities which have already arisen – the legislation does not provide for clearances in respect of future, potential or hypothetical liabilities.

Each customer, or their agent, will need to submit the following information:

  • name of customer
  • UTR, or NINO if an individual applying
  • contact details (address and telephone number)
  • scheme name and SRN (if applicable)
  • case reference number (if applicable)
  • liability calculation – computation of liability (broken down by individual employee unless liability is for Corporation Tax)
  • proof of liability – SAFE reference number and date
  • payment – evidence of payment if the application is made afterwards, or proof of funds in the scheme if the application is made before the payment.

Details of the application process will be published on GOV.UK.

Any amounts paid as provisional payments of tax in terms of section 554Z11D (please see EIM46090) cannot be treated as relevant payments of tax.