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HMRC internal manual

PAYE Manual

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HM Revenue & Customs
Updated
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Employer records: modified PAYE schemes: employees seconded abroad - EP Appendix 7B arrangements from April 2006 (Action Guide)

Note: For arrangements made before 5 April 2006 see PAYE28012.

To deal with a request from an employer to operate modified NICs under EP Appendix 7B follow steps 1 - 9 below. The Guide is presented as follows

Step 1

Step 2

Steps 3 - 4

Steps 5 - 6

Steps 7 - 9

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

When an employer advises you that they wish to operate modified NICs on their employees seconded abroad

  1. Advise the employer that they have to make an application in accordance with EP Appendix 7B

 

When you receive an application from an employer to operate modified NIC payments in accordance with EP Appendix 7B

  1. Check whether the PAYE scheme for the employer’s seconded employees is a separate ‘dedicated’ PAYE scheme for inbound and outbound expatriates
  • If yes, forward the EP Appendix 7B application to Personal Tax International in Manchester
  • If no, forward the EP Appendix 7B application to a colleague of officer grade or above to review

Review of EP Appendix 7B application

  1. Does the application meet all four of the following conditions for the relevant employees?
  • Seconded abroad
  • Non-resident and not liable for UK tax
  • Pay UK NICs on earnings in excess of the annual Upper Earnings Limit, and
  • Receive part of their earnings from a payroll abroad
  1. Ensure that all the above conditions are met
  • If all conditions are met accept the application - go to step 5, or
  • If all conditions are not met, refuse the application and return it to the employer

 

Where an application to operate modified NICs under EP Appendix 7B is accepted

  1. Use EBS Function EMPLOYER SET UP to create an employer record
  • Use scheme type DCNI per PAYE20091 but do not issue an employer starter pack
  • Enter (EP Appendix 7B) after the employer name for example ‘A456 Ltd (EP Appendix 7B)’. If the name is too long for the space available abbreviate to (App 7B) after the employer name
  • Ensure form P24N-1 is issued to the employer and / or agent with (EP Appendix 7B) shown in the employer name
  1. Insert an item in the employer-related electronic file ‘Employer with employees seconded abroad - earnings paid by overseas companies’

 

The employer-related electronic file ‘Employer with employees seconded abroad - earnings paid by overseas companies’ must be reviewed in April each year

For each entry where there was an EP Appendix 7B arrangement to defer NIC payments for CY-1 you must

  1. Use Function VIEW EOY RETURNS HISTORY to check whether a NICs Settlement Return (NSR) has been received for CY-1
  • If an NSR has been received and the date it was recorded as received is 31/03/CY or earlier go to step 9
  • If an NSR has not been received, request the NSR then go to step 8, or
  • If an NSR was received after 31/03/CY go to step 8
  1. Forward the following details to the penalty officer to consider raising penalties
  • Employer name
  • Employer PAYE reference
  • The year for which the NSR has not been received or the date of any NSR received late
  1. Use Function VIEW BROCS, Formats 2 and 3, to establish if the NIC liability has been paid and that all payments were made by 31/03/CY
  • If payment was received by 31/03/CY or earlier, no further action is required
  • If payment has not been received or was received after 31/03/CY contact the Debt Management Office and advise them that interest is due on all payments made after the previous 19 April