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HMRC internal manual

PAYE Manual

HM Revenue & Customs
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Employer returns: regulation 80 determinations: benefit arising under S223 ITEPA: regulation 80 tax

Regulation 80 tax paid by the employer is a benefit assessable on the director. This is because the remuneration has been received in full without deduction of tax which should have been made.

There are three questions to ask

  • Has the tax been paid?
  • What was the date of payment?
  • Who ultimately pays the tax?

Normally you will not expect to be told that payment has been made. Do not spend time asking either the Debt Management Office or the employer. Take the following action

  • Note the Regulation 80 tax appropriate to the director on form P247 in the column for the year of presumed payment. Assume that payment will occur in the year in which the determination is made, unless the following apply

    • It is made towards the end of the year, reducing the likelihood that the tax can be paid before 5 April

    And / or

    • There is an appeal which remains open until towards or after the end of the year. In this event you must judge the most likely time of payment following the settlement of the appeal
  • Wherever possible include the benefit in the coding for the selected year. Alternatively, include the benefit in an enquiry or amended assessment
  • Remove the benefit if, on appeal, the director tells you that the tax has not been paid at all. (An appeal on the grounds that the tax has not been paid provides further evidence of the employer’s reluctance to meet its PAYE obligations.)
  • Attach a note of the position to the file copy of the relevant Regulation 80 determination

If the director tells you the tax has not been paid at all in the presumed year of payment, assume payment will be made in the following year and assess that year accordingly. Note that if the employer entirely fails to pay the Regulation 80 tax, the director can only be assessed in the year the employment ends. It may be impractical for you to pursue matters that far.

  • Seek evidence from the director in support of a contention made, on appeal, that the tax was reimbursed or made good to the employer, for example by debiting a director’s account with the company