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HMRC internal manual

PAYE Manual

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HM Revenue & Customs
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Reconcile individual: end of year reconciliation: interaction with self assessment

General information
SA years reconciled on NPS
Incorrect SA Start Year set on NPS
SA balancing charges
Prepopulating SA returns with NPS details

General information

For the purpose of determining a customers tax liability for a given year they are either

  • A Self Assessment (SA) case and their tax liability for the year will be determined upon receipt of their SA return

Or

  • Outside SA and their tax liability for the year will need to be determined by an end of year reconciliation undertaken on / by the PAYE Service

It is essential that the taxpayer provides his or her verified National Insurance Number (NINO) before the case is set up in SA (unless due to circumstances where the taxpayer will not have a NINO, for example a foreign national). This will enable the SA record to be matched with a record held on the Citizen Identification Framework.

Unless there is a valid reason for an individual not to have a validated NINO the case should not be set up in SA but the individual advised to obtain a NINO (see SAM100220).

If you do not have a verified NINO for a customer you must contact them on a minimum of two separate occasions to ask for the NINO before an SA record is set up and a UTR allocated. See action guide tax40114 WI117 for further guidance on obtaining the customers NINO and BF periods.

To enable the PAYE Service to determine the end of year process to apply to a year, the system is automatically updated with the following SA information

  • A ‘Live SA’ indicator (PAYE103065)
  • An ‘SA start year’ (PAYE93032)
  • An ‘SA Final Year’ indicator (PAYE103065)
  • The customers SA UTR (Unique Taxpayer reference) (PAYE103065)

For a year that falls within SA, where a live SA record is already held for the year

  • At the point at which the PAYE Service looks to automatically reconcile the year (PAYE93010) or, if later, at the point at which the Service is scanned for un-reconciled cases (PAYE96001), the year concerned will automatically be reconciled to show a status of ‘Reconciled - SA’
  • If you try to manually reconcile the year you will be presented with an online message of ‘Reconciliation cannot occur. Individual in SA’. Where this is so, if the year is not already reconciled, you should manually set it to ‘Reconciled - SA’ (PAYE93015)

For a year that falls within SA, where a dormant SA record is already held for the year

  • At the point at which the PAYE Service looks to automatically reconcile the year (PAYE93010) or, if later, at the point at which the Service is scanned for un-reconciled cases (PAYE96001), the year concerned will automatically be reconciled to show a status of ‘Reconciled - SA’
  • If you try to manually reconcile the year you will be presented with an online message of ‘Reconciliation cannot occur. Individual in SA’. Where this is so, if the year is not already reconciled, you should manually set it to ‘Reconciled - SA’ (PAYE93015)
  • The SA record will be re-activated and the Notice to File issued
  • WI117 will only be created in these cases if SA cannot re-activate the account or there is not enough information to create an SA account.

For a year that matches with certain SA criteria and the year concerned is not already noted as SA

  • Where the system is automatically looking to reconcile the year, reconciliation will not take place and either an SA account will be created and the year reconciled SA or work item 117 (action guide tax40114 WI117) will be created to allow the year to be reviewed manually
  • If you try to manually reconcile the year you will receive an appropriate online message to say that the case / year should be in SA and you should follow the work item 117 guidance in action guide tax40114 WI117 to review the year concerned

For a year that does not fall within SA, the customer’s tax liability for the year will be determined by an end of year reconciliation undertaken on the PAYE Service either

  • Automatically by the system at the point at which it holds the information it requires to undertake a tax calculation

Or

  • Manually during the course of reviewing the year whilst dealing with customer correspondence or during the course of resolving an end of year work item

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SA years reconciled on NPS

Although information automatically passed between NPS and SA should ensure that a given year is cleared on one system only (see ‘General information’ above), this may not always happen. One example of when this may be so is where a customer automatically submits an unsolicited SA return for CY-1, the SA start year (PAYE93032) passed to NPS will be CY and the customer may receive both an SA Statement and an NPS tax calculation in respect of CY-1.

Where you become aware of this you may need to update the individual’s SA record to reflect the correct position and allow the details to pass to NPS. You should proceed as follows to correct the NPS information, where the NPS calculation for the SA year has already been issued:

1.Where the calculation resulted in an underpayment

* Cancel the NPS underpayment arising in the SA year using a reason of ‘Cancelled - Transferred to CESA’

Note: Where an underpayment arising in the SA year has status coded out CY or CY+1 you should record revenue loss TYPE 15.

* Manually set the year to ‘Reconciled - SA’
* If required, recode CY / CY+1
* Update Contact History with details of the action taken
  1. Where the calculation resulted in an overpayment and the Payable Order has not been cashed

    • Ask the customer to destroy the Payable Order
    • Complete a cancelled Payable Order stencil
    • Manually Set the year to ‘Reconciled - SA’
    • If required update the SA record as detailed below in ‘Incorrect SA Details’
    • Update Contact History with details of the action taken
  2. Where the calculation resulted in an overpayment and the Payable Order has been cashed SA Return for the year.

Where the SA Return for the year:

a. Has not yet been filed

* Make an SA note of the amount repaid through NPS
* If required update the SA record as detailed below in ‘[Incorrect SA Details’ ](http://incorrectsastartyearsetonnps)
* Update Contact History with details of the action taken

b. Was filed after the NPS repayment was made

* Repair the SA return (SAM121211)

Note: A repair by HMRC must be made within 9 months of the date the return was filed (SAM121530) and a customer has the right to amend the return within 12 months of the statutory filing date (SAM124165).

* Manually set the year to ‘Reconciled - SA’
* Update Contact History with details of the action taken

c. Was filed before the NPS repayment was made or

d. was filed after the NPS repayment was made and is outside the time limit for repair by HMRC or amendment by the customer

* Follow the guidance at DMBM215190 to recover the repayment by means of an S30 assessment or through the Duty Repaid In Error Refunded (DRIER) procedure

Note: In S30 assessment cases where Revenue error is established no interest should be charged (SAM112020 refers).

Note: There are deadlines for making a S30 assessment. Guidance on this can be found at CH56100.

* Manually set the year to ‘Reconciled - SA’
* Update Contact History with details of the action taken
  1. Where the calculation resulted in an overpayment which is eligible for BACS and the repayment is ‘Outstanding’ and ‘Pending’ and the repayment method is ‘In Claim’

    • Check the NPS SA indicator shows the correct year(s) are shown as SA

 

If NPS SA ‘Start Year’ and ‘Final Year’ indicators are correct 

* Set year as ‘Reconciled - SA’
* Update Contact History with details of the action taken
* If required update the SA record as detailed below in ‘[Incorrect SA Details’](http://incorrectsastartyearsetonnps)
* Take no further action. – NPS will update correctly at the point at which the deferred Payable Order process date is reached.

If NPS SA ‘Start Year’ and ‘Final Year’ indicators are not correct

* Set No Repayment indicator
* Set year as ‘Reconciled – SA
* Update SA record as detailed below ‘Incorrect SA Details’
* Update Contact History with details of the action taken
* B/f case for 3 working days to allow NPS to update with the correct SA details
* When NPS has updated correctly remove the No Repayment indicator
* Take no further action. – NPS will update correctly at the point at which the deferred Payable Order process date is reached
  1. Where the calculation resulted in an overpayment which has been ‘Issued’ or ‘Paid’ and the repayment method is BACS.

Where the SA Return for the year:

a. Has not yet been filed

* Make an SA note of the amount repaid through NPS
* If required update the SA record as detailed below in ‘Incorrect SA Details’
* Update Contact History with details of the action taken

b. Was filed after the NPS repayment was made

* Repair the SA return (SAM121211)

Note: A repair by HMRC must be made within 9 months of the date the return was filed (SAM121530) and a customer has the right to amend the return within 12 months of the statutory filing date (SAM124165).

* Manually set the year to ‘Reconciled - SA’
* Update Contact History with details of the action taken

c. Was filed before the NPS repayment was made or

d. was filed after the NPS repayment was made and is outside the time limit for repair by HMRC or amendment by the customer

* Follow the guidance at DMBM215190 to recover the repayment by means of an S30 assessment or through the Duty Repaid In Error Refunded (DRIER) procedure

Note: In S30 assessment cases where Revenue error is established no interest should be charged (SAM112020 refers).

Note: There are deadlines for making a S30 assessment. Guidance on this can be found at CH56100.

* Manually set the year to ‘Reconciled - SA’
* Update Contact History

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Incorrect SA Start Year set on NPS

For SA cases set up / re-opened before to 7 July 2015 the instructions at PAYE93033 inform you about the working of the SA Start Year screen and instruct you to take care when setting the start year back as, once set, you will be unable to change the year concerned to a later year. Setting the year back too far will lead NPS to believe that the year(s) incorrectly set as SA will be dealt with through SA and as this is not so in reality the year(s) concerned will not be cleared on either NPS and / or SA. To rectify this, for cases where a year has incorrectly been set as SA, you will need to follow the manual process below to clear the year(s) concerned.

1. Prepare P800 SEES Tax Calculation(s) for the year(s) concerned. Where the result of the calculation(s) is
   
  * Balanced exactly and / or an under / overpayment within tolerances, go to step 2
  * An overpayment outside tolerances, go to step 3
  * An underpayment outside tolerances, go to step 4
2. Where the result of the calculation(s) is balanced exactly and / or an under / overpayment within tolerances
  * Manually set the year(s) concerned to Reconciled - Balanced
  * Place a copy of the calculation(s) in the DR
  * Update Contact History with details of the action taken
3. Where the result of the calculation(s) is overpayment outside tolerances
  * Place a copy of the tax calculation(s) in the DR
  * Issue a copy of the calculation(s) to the customer / agent along with an appropriate OCA letter of explanation
  * Deal with the resulting repayment manually in accordance with Action guide 40031tax
  * Update Contact History with details of the action taken
4. Where the result of the calculation(s) is underpayment outside tolerances
  * Place a copy of the tax calculation(s) in the DR
  * Issue a copy of the calculation(s) to the customer / agent along with an appropriate OCA letter of explanation
  * Manually insert the underpayment into NPS through the Insert Underpayment Details screen within the Accounting function. The underpayment should be entered into NPS with a source of ‘Transferred from CESA’
  * Update Contact History with details of the action taken

 

Note: The instructions above only apply to cases where a user has incorrectly set the SA Start Year back too far and they should not be followed in any other circumstances (for example where a Nil SA Return has been captured for the year and the action concerned prevents the year from being able to be reconciled through NPS).

For SA cases set up / re-opened after 7 July 2015, NPS is sent the correct SA Start Date (Year) by SA (PAYE93032) and you should not need to alter it.

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SA balancing charges

Where an SA balancing charge is outstanding for a later year and an earlier year is reconciled or re reconciled on NPS, the balancing charge will be shown as a starting balance in the earliest NPS calculation undertaken. For example, in a case where the SA balancing charge is for CY-1 and the earliest NPS calculation undertaken is for CY-3, the amount of the balancing charge will be shown in the CY-3 calculation as ‘Tax underpaid at start of year’. NPS is working correctly in the cases concerned as, where the customer is overpaid in the year the balancing charge (or an element of it equal to the NPS overpayment) will be collected at the earliest opportunity.

{#prepopulatingsareturnswithnpsdetails}Prepopulating SA returns with NPS details

To assist customers to complete their SA returns, NPS provides SA with the following annual information (commencing with 2014-15) to populate into the return:

  • details of any underpayment and / or outstanding debt coded out in the year
  • state pension details
  • pay and tax details for each employment / occupational pension source held on NPS
  • P11D details for all relevant employments
  • JSA payment and ESA payment / tax details
  • for cases where CY-1 has been reconciled underpaid on NPS as part of a single year reconciliation prior to the year being notified as SA, details of any repayment already made for the year by NPS.  In cases where the CY-1 NPS single year rpayment has a status of either Pending or Stopped at the point at which NPS is notified that the year is now SA, the repayment will be cancelled and an automated Contact History note of ‘NPS repayment stopped, year now SA’ will be entered onto the customers record.

Details at bullets 3 to 5 will be sent to SA at the point at which the customers record would otherwise be ripe for reconciliation / re-reconciliation on NPS.