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HMRC internal manual

PAYE Manual

From
HM Revenue & Customs
Updated
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Employer records: maintain employer record: employer segmentation - appeals and claims (Action Guide)

To deal with appeals and claims against segmentation notices, follow steps 1 - 35 below. The guide is presented as follows

Receipt of an appeal or claim Steps 1 - 4
   
Consideration of an appeal Step 5
Appeals against segmentation band Steps 6 - 8
Employer figures do not agree Steps 9 - 10
More information received from the employer Step 11
Withdrawal of appeal Step 12
Appeal rejected Step 13
Appeal resolved by review or the Tribunal Steps 14 - 15
Schemes excluded from online filing Steps 16 - 19
Religious exemption from online filing Step 20
Religious exemption from electronic payment Step 21
Care and Support employer claims Steps 22 - 33
Other appeals Steps 34 - 35

 

For details of how to access any of the Employer Business Service functions, use PAYE057.

 

Receipt of an appeal or claim

1. * On receipt of a claim on the grounds of being a Care and Support employer, go to step 22
   
  * For all other appeals, go to step 2
2. On receipt of an appeal, use Function AMEND EMPLOYER SEGMENTATION to enter the date in the Appeal Received Date
  The appeal must be made in writing within 30 days from the date of issue, or reissue, of the notification to the employer
3. Your next action will depend on whether the appeal has been received on time
  * If the appeal has been received on time go to step 5
  * A late appeal may be accepted if there is a reasonable ‘excuse’
  A reasonable excuse is one where the employer can show that they do not have the relevant information to make the submission on time. For example, records were destroyed when the employer’s premises were flooded and it took time to reconstruct them, if so go to step 5
4. If the appeal is late and cannot be accepted
  * Contact the employer and explain the appeal is late and ask them to withdraw the appeal because it was received late. Our decision letter should tell the employer that if they wish to pursue the matter it is for them to apply to the Tribunal for them to decide whether the appeal should be considered even though it is late
  * If the appeal is withdrawn go to step 12
  * If the appeal is not withdrawn or the employer does not reply go to step 13

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Consideration of an appeal

5. Use Function AMEND EMPLOYER SEGMENTATION to change the Status field to ‘Appeal Open’ from the drop down list
   
  Note: Appeals may be received from employers for the following reasons
  * Objections to the segmentation band they fall into, go to step 6
  * They do not have any PAYE employees, go to step 16
  * Not wanting to use online filing on religious grounds, go to step 20

Appeals against segmentation band

6. If an appeal is received on the grounds that the employer is in the wrong segmentation band
   
  * Check the number of employees supplied by the employer on the appeal letter
  * Use Function VIEW EMPLOYER SEGMENTATION to check the segmentation count for the appropriate year
  * If the recorded segmentation count agrees, (This content has been withheld because of exemptions in the Freedom of Information Act 2000) that stated by the employer accept the employer’s figure and settle the appeal by agreement, go to step 7
  * If the recorded segmentation count does not agree, (This content has been withheld because of exemptions in the Freedom of Information Act 2000) that stated by the employer, go to step 9
7. Issue the appropriate letter to determine the appeal by agreement (Word 28KB)
8. Use Function AMEND EMPLOYER SEGMENTATION to
  * Record the Appeal Settled Date
  * Change the Revised Segment Band field to the agreed band
  * Change the Status field to ‘Incorrect Count’

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Employer figures do not agree

9. (This content has been withheld because of exemptions in the Freedom of Information Act 2000) you will need to assess the accuracy of the information held about the number of employees. For example, the number of employees could have been substantially reduced but forms P45(1) may only just have been received and have not yet been processed
   
  If you decide the segmentation band held on our employer records is wrong settle the appeal by agreement and take the action detailed at step 7 above
  (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
10. If the employer does not supply details of how many employees they employ (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
  * Send the letter to request more information from the employer (Word 25KB)
  * BF the papers for 4 weeks

More information received from the employer

11. When additional information is received from the employer consider whether the appeal is still valid
   
  * If the recorded segmentation count agrees, (This content has been withheld because of exemptions in the Freedom of Information Act 2000) accept the employer’s figure go back to step 7
  * If you are unable to accept the number of employees submitted by the employer or if the employer does not send in the additional information or evidence requested within four weeks go to step 13

Withdrawal of appeal

12. If the appeal is withdrawn before it is settled
   
  * Acknowledge the withdrawal to the employer by sending appropriate letter to determine the appeal by agreement
  * Use Function AMEND EMPLOYER SEGMENTATION to
  * Record the ‘Appeal Settled’ Date
  * Change Status field to ‘Appeal Withdrawn’
  Note: There should be no entry in the ‘Revised Segmentation Band’ field.

Appeal rejected

If we are not accepting an appeal on the grounds that it was late, then write to the employer explaining this. It is then open to the employer to apply to Tribunal for them to decide whether the appeal should be considered even though it is late.

If we have considered the appeal but do not agree with it, then write to the employer explaining our current view of the matter and offer review. (Note: Up until the time we do this it is also possible for the employer to ask for a review.)

When an appeal is neither accepted nor withdrawn

13. Use Function AMEND EMPLOYER NOTES to record the date that the letter was issued
   

Appeal resolved by review or the Tribunal

14. When an appeal is denied by review or by the Tribunal you should
   
  * Use Function AMEND EMPLOYER SEGMENTATION to
  * Enter the date in the ‘Appeal Settled’ Date field
  * Amend Status to ‘Appeal Denied’
  * Use Function AMEND EMPLOYER NOTES to note why the appeal was denied
  Note: There must not be entry in the Revised Segmentation Band field when an appeal is denied.
15. When an appeal is upheld by review or the Tribunal you should
  * Use Function AMEND EMPLOYER SEGMENTATION to
  * Enter the settlement date in the ‘Appeal Settled Date’ field
  * Amend ‘Status’ to show the reason for the agreed change which will be either Incorrect Count, Scheme Type Excluded, Religious Exemption or Care and Support
  * Enter Revised Segmentation Band agreed
  * Use Function AMEND EMPLOYER NOTES to record details of the appeal decision
  Note: Before April 2013 care and support employers were recorded on EBS under Religious exemption as there was no separate category for them. EBS now has a separate category for care and support and allows you to set this for years prior to 2013-14.

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Schemes excluded from online filing

  There are a number of scheme types which are excluded from the requirement to use online filing. The scheme types that are excluded from segmentation and the need to use online filing to submit their returns are DCNI, DPGEN, DPNI, ELECT, EXAM, NORPRO, PSS, TAS and XP
   
16. When an employer makes an appeal that they do not have any employees or they operate one of the excluded schemes
  * Use Function VIEW EMPLOYER SUMMARY to determine the present scheme type from the Employer Trade and Scheme Details
  * If the scheme type for the current year is one that is already excluded confirm this to the employer by letter and go to step 17
  * If the scheme type for the current year is one that is not excluded go to step 18
17. Use Function AMEND EMPLOYER SEGMENTATION to
  * Record the ‘Appeal Settled Date’
  * Change the ‘Status’ field to ‘Scheme Type Excluded’
18. All employers with genuine employees should make an annual return therefore confirm with the employer that they will no longer have any employees required to pay PAYE or receive tax credits now or in the future
  * If the employer confirms that they need to change to an excluded scheme type follow the guidance in the appropriate change of scheme type Action Guide in section ‘Maintain schemes’ at PAYE27000 onwards
  * Use Function AMEND EMPLOYER SEGMENTATION to
  * Record the ‘Appeal Settled Date’
  * Change Status field to ‘Scheme Type Excluded’
19. If the employer is unable to provide the information or has not replied after four weeks go back to step 13
  * If the employer withdraws the appeal go back to step 12

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Religious exemption from online filing

  Appeals against online filing on the grounds of religious conscience must be treated carefully. If the appeal does not say that the employer is a ‘member of the Brethren’, contact the Tax Administration Advice Unit (TAA) for advice. Do not ask the employer for any information until you have received guidance from TAA
   
20. Contact TAA to discuss the individual case
  * The appeal may be accepted if the employer belongs to a particular organisation, is not willing to use computers or online filing and is unwilling to ask a friend to do so on their behalf
  * If TAA agree the appeal is acceptable treat the appeal as settled by agreement
  * Issue the letter to determine an appeal on religious grounds (Word 24KB)
  * Use Function AMEND EMPLOYER SEGMENTATION to
  * Record the ‘Appeal Settled Date’
  * Change Status field to ‘Religious Exemption’
  * Change Revised Segmentation Band to ‘Exempt’

Religious exemption from electronic payment

  Employers cannot appeal against electronic payment on the basis of religious conscience. The only grounds for appeal are those detailed above
   
21. If you receive an appeal against the requirement to use electronic payment you should
  * Send a letter asking the employer to withdraw the appeal (Word 24KB)
  * BF papers for four weeks
  * If the employer withdraws the appeal go back to step 12
  * If the appeal is not withdrawn or you have not received a reply after four weeks contact TAA to discuss the individual case
  * If the TAA agree go back to step 13

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Care and Support employer claims

Criteria for being a Care and Support employer

The employer must employ a person to provide domestic or personal services at the employer’s home where

  • The services are provided to the employer or member of the employer’s family

And

  • The recipient of the services has a physical or mental disability, or is elderly or infirm

The employer must

  • Not have received a tax free payment for filing online within the last three years

And

  • Submit their own Employer Annual Return, which must not be submitted by another person on the employer’s behalf

| 22. | On receipt of a written claim | || |   | * Use EBS Function AMEND EMPLOYER SEGMENTATION to | |   | * Enter the date the claim was received in the Appeal Received Date field | |   | * Change the Status field to ‘Appeal Open’ | | 23. | * If the employer fits the ‘criteria for being a Care and Support employer’ (see heading above), go to step 33 | |   | * If the employer does not fit the criteria for being a Care and Support employer, go to step 24 | | 24. | If the employer does not fit the criteria for being a Care and Support employer | |   | * Write to the employer explaining why they do not fit the criteria and invite them to either | |   | * Withdraw their claim | |   | Or | |   | * Provide an explanation / reasonable excuse of why they do fit the criteria. A reasonable excuse is where an employer is able to provide an explanation of why they may not have met the criteria for being a Care and Support employer yet still they feel their claim is appropriate | |   | An example of this could be where the employer did not file their previous year’s Employer Annual Return (P35 and forms P14) due to serious ill health
 
Note: These cases must be treated sympathetically; we do not expect you to ask for evidence to support their claim. | | 25. | * If the employer withdraws their claim (this does not have to be done in writing), go to step 30 | |   | * If the employer does not withdraw their claim and wants to continue with their claim, on the grounds of ‘reasonable excuse’, go to step 26 | | 26. | * If the employer provides a reasonable excuse which is acceptable, go to step 33 | |   | * If the reasonable excuse is not acceptable, go to step 27 | | 27. | If the reasonable excuse is not acceptable, refer the papers to the Tax Administration Advice Unit (TAA) with a completed form TAA1 available on the Tax Administration Advice - caseworker service for techinical queries page | | 28. | * If TAA advise you that the claim can be accepted, go to step 33 | |   | * If TAA advise you that the claim can not be accepted, go to step 29 | | 29. | Write to the employer explaining why their appeal has not been accepted | |   | * If the employer accepts this decision and withdraws their claim (this does not have to be done in writing), go to step 30 | |   | * If the employer does not agree with our decision, go to step 31 | | 30. | If the employer accepts this decision and withdraws their claim | |   | * Use EBS Function AMEND EMPLOYER SEGMENTATION to | |   | * Record the ‘Appeal Settled Date’ | |   | * Change the Status field to ‘Appeal Withdrawn’ | |   | * Use EBS Function AMEND EMPLOYER NOTES to note that the claim was withdrawn | |   | * Make an entry in the employer related electronic file ‘Care and Support Employers’ of the | |   | * Employer PAYE reference | |   | * Employer name | |   | * Claim withdrawn | | 31. | If the employer does not agree with our decision, the case can be taken to the Tribunal by the employer | |   | * If the claim is denied by the Tribunal, go to step 32 | |   | * If the claim is upheld by the Tribunal, go to step 33 | | 32. | If the claim is denied by the Tribunal | |   | * Use EBS Function AMEND EMPLOYER SEGMENTATION to | |   | * Record the ‘Appeal Settled Date’ | |   | * Change the Status field to ‘Appeal Denied’ | |   | * Use EBS Function AMEND EMPLOYER NOTES to note that the claim was denied | |   | * Make an entry in the employer related electronic file ‘Care and Support Employers’ of the | |   | * Employer PAYE reference | |   | * Employer name | |   | * Claim denied | | 33. | If the claim can be accepted | |   | * Write to the employer and advise that their claim has been accepted and they do not need to file their Employer Annual Return (P35 and forms P14) online | |   | * Record the ‘Appeal Settled Date’ | |   | * Change the Status field to ‘Care and Support’ | |   | * Change the Revised Segmentation Band to ‘Exempt’ | |   | * Use EBS Function AMEND EMPLOYER NOTES to note the claim | |   | * Make an entry in the in the employer related electronic file ‘Care and Support Employers’ of the | |   | * Employer PAYE reference | |   | * Employer name | |   | * Claim accepted |

Other appeals

  The only grounds for an employer to make an appeal are those given above. If other appeals are received follow the guidance below
   
34. Enquiries received by telephone
  * Explain the grounds for appeal as outlined in the leaflet ‘Do it online, your guide to filing PAYE returns and paying electronically’ sent out with the original notice and explain that they cannot appeal on other grounds
  * If the employer considers they have valid grounds ask them to write in giving details of the reasons for appeal in line with the instructions in the leaflet
35. Appeals received by letter
  * Send a letter asking the employer to withdraw the appeal
  * BF the papers for four weeks
  * If the employer withdraws the appeal go back to step 12 above
  * If the appeal is not withdrawn or you have not received a reply after four weeks, go to step 13