PAYE96270 - Reconcile individual: reconciling CY-4 to CY-2: reconciling multiple years - final year result

Where a multiple year reconciliation is triggered and the system recognises the last year to be reconciled, it will automatically apply rules to the year concerned before it determines the final / accepted position for the year. The rules applied will consider whether or not the year in isolation balanced (exactly and / or within tolerances), is reconciled underpaid above tolerances or it is reconciled overpaid above tolerances. Consideration will then be given as to whether or not a potential underpayment (PUP) was held for the year and / or whether or not an underpayment or overpayment from an earlier year needs to be accounted for. The final / accepted position for the year will be dependant upon the outcomes found and once known, the system will look at the results of all years within the multiple year reconciliation before it determine the final results to be applied to them.

The rest of this subject is set out as follows

Cases reconciled balanced within tolerances, no PUP
Cases reconciled balanced or overpayment within tolerances, PUP held
Cases reconciled balanced or underpaid within tolerances, PUP held
Cases reconciled underpaid above tolerance, no PUP
Cases reconciled underpaid above tolerance, PUP held
Case reconciled overpaid above tolerances

Cases reconciled balanced within tolerances, no PUP

When the result of the last year (in isolation) is balanced exactly and / or an under or overpayment within tolerances arises, the year will be set to ‘Reconciled - Balanced’ and a Tax Calculation (P800) will not be issued. A check will then be made to identify whether any underpayment or overpayment arises in the previous year and where the result brought forward is an

  • Overpayment (above tolerance), the amount concerned (including any appropriate supplements) will be repaid to the customer
  • Underpayment (above tolerance), the underpayment concerned will be coded out in CY+1 or, where it is not possible to do this, work item 236 (action guide tax40046 WI 236) will be raised to allow it to be pursued through voluntary payment.

Cases reconciled balanced or overpayment within tolerances, PUP held

When the result of the last year (in isolation) is balanced exactly or, an overpayment within tolerances arises in the year a check will be made to determine whether or not the year being reviewed is CY-1. Where it

  • Is, the year being reviewed will be set to ‘Reconciled - Balanced’ and the customer’s tax code for CY will be updated to remove the PUP from within it
  • Is not, the year will be set to ‘Reconciled - Balanced’ and the where applicable the amount overpaid will not be offset against any underpayment arising in an earlier year and / or added to any overpayment arising in an earlier year

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Cases reconciled balanced or underpaid within tolerances, PUP held

When the result of the last year (in isolation) is balanced exactly or, an underpayment within tolerances arises a check will be made to identify whether or not the actual underpayment is less than the PUP. Where it

  • Is, and the underpayment calculated is less than the PUP
  • By more than £10, the actual underpayment arising will be treated as the accepted result for the year
  • By less than £10, the year will be set to ‘Reconciled - Balanced’ and the PUP will be treated as the accepted result for the year
  • Is not, and the actual underpayment is more than the PUP for the year, the years will be set to ’Reconciled - Balanced’ and the PUP will be treated as the accepted result for the year

A check will then be made to identify whether or not and underpayment or overpayment arises in the previous year. Where it does and the result brought forward is an

  • Underpayment, the underpayment concerned will be added to accepted underpayment arising in the year being reviewed to establish the final position at the year end
  • Overpayment, the overpayment concerned (including supplement) will be offset against the underpayment arising in the year being reviewed to establish the final position at the year end

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Cases reconciled underpaid above tolerance, no PUP

When the result of the last year (in isolation) is an underpayment above tolerance and a PUP is not held the system will check to identify whether or not an underpayment or overpayment arises in the previous year. Where it does and the result brought forward is an

  • Underpayment, the underpayment concerned will be added to accepted underpayment arising in the year being reviewed to establish the final position at the year end
  • Overpayment, the overpayment concerned (including supplement) will be offset against the underpayment arising in the year being reviewed to establish the final position at the year end

Where no underpayment or overpayment arises in the previous year, the result of the underpayment calculated will be accepted as the result for the year.

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Cases reconciled underpaid above tolerance, PUP held

When the result of the last year (in isolation) is an underpayment above tolerance and a PUP is held a check will be made to identify whether or not the actual underpayment is less than the PUP. Where it

  • Is, and the underpayment calculated is less than the PUP
  • By more than £10, the actual underpayment arising will be treated as the accepted result for the year
  • By less than £10, the year will be set to ‘Reconciled - Balanced’ and the PUP will be treated as the accepted result for the year
  • Is not, and PUP will be subtracted from the actual underpayment and the difference is
  • Equal to or less than the underpayment tolerance (PAYE93075), the year will be set to ‘Reconciled - Balanced’ and the PUP amount will be the accepted result for the year
  • More than the underpayment tolerance (PAYE93075), the actual underpayment arising will be the accepted result for the year

A check will then be made to identify whether or not and underpayment or overpayment arises in the previous year. Where it does and the result brought forward is an

  • Underpayment, the underpayment concerned will be added to accepted underpayment arising in the year being reviewed to establish the final position at the year end
  • Overpayment, the overpayment concerned (including supplement) will be offset against the underpayment arising in the year being reviewed to establish the final position at the year end

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Case reconciled overpaid above tolerances

When the result of the last year (in isolation) is an overpayment above tolerance, where due, repayment supplement will be added to the amount concerned to determine the final amount overpaid.

A check will then be made to identify whether or not an underpayment or overpayment arises in the previous year. Where it does and the result brought forward is an

  • Overpayment, the overpayment concerned (including any appropriate repayment supplement) will be added to accepted overpayment arising in the year being reviewed to establish the final position at the year end
  • Underpayment, the underpayment will be offset against the overpayment (including supplement) arising in the year being reviewed to establish the final position at the year end

If a PUP arose in the year being reviewed and the year is CY-1, the PUP will be cancelled and the customer’s code for CY will be updated automatically to remove it.