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HMRC internal manual

PAYE Manual

Reconcile individual: reconciling CY-4 to CY-2: reconciling multiple years -identifying years covered

Where multiple year reconciliations are triggered, the result will determine the next action:

  • Overpaid – years will be reconciled as balanced or overpaid and the remaining overpayment amount will be repaid
  • Balanced – years will be reconciled in isolation any overpayments identified will be used to set off years reconciled underpaid
  • Underpaid and collected by tax code – years will be reconciled and the underpayment will be collected by a tax code
  • Underpaid and cannot be coded – years will be reconciled in isolation. Any years underpaid will be collected by Simple Assessment PAYE96300 

NPS will identify the earliest year to include in a multiple year reconciliation by:

  • Identifying the earliest year with a starting balance of nil, where no carried forward underpayments exist in the earliest year. This will be within years CY-1 to CY-4
  • Not including existing SA or Simple Assessment years.

Reconciliation reasons

Where the system can, for each year covered by the multiple year reconciliation, identify at least one and up to 5 reasons as to why the customer is over / underpaid

  • A tax calculation (P800 or PA302) for the years concerned will be issued automatically and you will not be able to see them prior to them being issued
  • The customer’s reconciliation and accounting records will be updated automatically with regard to the tax calculations issued

    • Where a P800 is issued for any year covered by the multiple year reconciliation, identifies more than 5 reasons as to why the customer is over / underpaid and the underpayment can be coded, the case will be output as work item 300 (Action guide tax40112) for manual review. Where this is so, the tax calculation (P800) will be issued at the time work item 300 is created and you be able to identify the reasons concerned as part of resolving the work item by selecting the [P800 Reasons] button on the appropriate tax calculations
    • Online. You will be presented with the Multiple Year Reconciliation Summary screen in which details of the years covered by the reconciliations will be displayed. The screen will only be display until you approve the calculations and issue them (PAYE96225) or you cancel them (PAYE96235). You will not be able to access / view it at a later date
  • Where a multiple year reconciliation includes a Simple Assessment year, the multiple year reconciliation review screen will indicate if a year has been reconciled as Simple Assessment by displaying a ‘Y’ in the ‘Simple Assessment’ field.
  • Where a simple Assessment year includes a carried forward underpayment from an earlier year, the carried forward underpayment may be returned to the source year (year original underpayment arose), if the carried forward underpayment is greater than the tax paid in the Simple Assessment year PAYE96315.
  • A separate PA302 will be issued for each individual Simple Assessment year identified during a multiple year reconciliation will be issued.

In the case of both system triggered and online triggered cases, once the calculations are issued you will be able to identify whether or not a particular tax calculation was issued as part of a multiple year reconciliation as the Multiple Year Reconciliation check box on the Tax Calculation screen for the calculation concerned will be checked. When you are called upon to review such a calculation, for example on receipt of an enquiry from a customer, you will need to review all tax calculations issued (PAYE96220) as part of the multiple year reconciliation (that is, all calculations issued on the same date with the Multiple Year Reconciliation check box checked) to obtain a full picture of the case.

Simple Assessment years

Where a Simple Assessment year is created for a year which includes a carried forward underpayment and tax paid is less than the carried forward underpayment amount, this will be returned to the originating underpaid year. In this case the multiple year reconciliation will be triggered and include the original underpayment (where the carried forward element will be cancelled) to the latest reconciled year PAYE96300.