Beta This part of GOV.UK is being rebuilt – find out what this means

HMRC internal manual

PAYE Manual

From
HM Revenue & Customs
Updated
, see all updates

Reconcile individual: reconciling CY-4 to CY-2: reconciling multiple years - final results

When the result of the final year to be reconciled is known, the system will determine the results to apply to each year within the multiple year reconciliation. The results concerned will be applied automatically by the system but will differ depending upon the final result of the calculations.

Final result - balanced within tolerances

When the final result of the multiple year reconciliation is balanced within tolerances and the results are approved, either automatically when the calculations are done by a batch transaction or, for online cases, at the time the calculations are approved (PAYE96225)

  • All years within the multiple year reconciliation will be set to ‘Reconciled - Balanced’
  • Tax Calculations (P800) in respect of the years concerned will not be issued
  • The customer’s Reconciliation and Accounting records will be updated to account for the accepted / approved reconciliation results

Alongside these actions, the customer’s tax coding records will be reviewed to determine whether or not an underpayment in respect of any of the years within the multiple year reconciliation has been coded out CY and / or later. Where it has, coding will automatically be triggered to remove the amount concerned from the code.

Final result - underpaid above tolerances and underpayment in CY code

When the final result of the multiple year reconciliation is an underpayment above tolerance and the results are approved (either automatically when the calculations are done by a batch transaction or, for online cases, at the time the calculations are approved (PAYE96225)), where an underpayment relating to a year within the multiple year reconciliation is held in the customer’s CY tax code, the system will undertake a coding check to compare the actual underpayment against the amount coded. Where the result of the compare is that

  • The actual underpayment is less than the coded amount by £10 or more, the actual underpayment will be accepted as the result for the year and coding will automatically be triggered to reduce the underpayment in the customer’s CY code to reflect the amount concerned
  • The actual underpayment is less than the amount coded by less than £10, the coded amount will be accepted as the underpayment arising and all years in the multiple year reconciliation will be set to ‘Reconciled - Balanced’
  • The actual underpayment is more than the coded out amount the system will identify whether or not the difference in the amounts concerned is above tolerance (PAYE93075). Where it

    • Is, the underpayment arising will be treated as the accepted final position and the further amount due will be left on record to be picked up for coding in CY+1 during the annual coding run or, where it will not be possible to collect the underpayment via coding or the amount concerned is £3,000 or more, it will be pursued through the voluntary payment processes (PAYE90011)
    • Is not, the coded underpayment will be accepted to be the final position and all years within the multiple year reconciliation will be set to ‘Reconciled - Balanced’

Alongside this the customer’s record will be reviewed to

  • Where appropriate (that is for years other than any accepted ‘Reconciled - Balanced’), instigate the issue of Tax Calculations (P800) to cover the years within the multiple year reconciliation
  • Update their Reconciliation and Accounting records to account for the accepted / approved reconciliation results

Final result - underpaid above tolerances and no underpayment in CY code

When the final result of the multiple year reconciliation is an underpayment above tolerance and the results are approved, (either automatically when the calculations are done by a batch transaction or, for online cases, at the time the calculations are approved (PAYE96225)), where no underpayment relating to tax year within the multiple year reconciliation is already coded out in CY, the system will

  • Update the customer’s Reconciliation and Accounting records to account for the reconciliations approved
  • Instigate the issue of Tax Calculations (P800) for all years, other than those already reconciled (in isolation) as ‘Reconciled - Balanced’
  • The customer tax coding records will then be reviewed and based on the information, the underpayment arising will either

    • Be left on record to be picked up for coding in CY+1 during the annual coding run

    Or

    • If the review indicates that it will not be possible to collect the underpayment through coding or the underpayment is £3,000 or more, automatically be pursued through the voluntary payment process (PAYE90011)

Alongside this the customer’s record will be reviewed to

  • Where appropriate (that is for years other than any accepted ‘Reconciled - Balanced’), instigate the issue of Tax Calculations (P800) to cover the years within the multiple year reconciliation
  • Update their Reconciliation and Accounting records to account for the accepted / approved reconciliation results

Final result - overpaid above tolerances

When the final result of the multiple year reconciliation is an overpayment above tolerance and the results are approved either automatically when the calculations are done by a batch transaction or, for online cases, at the time the calculations are approved (PAYE96225)

  • The customer’s Reconciliation and Accounting records will be updated to account for the outcomes of the reconciliations approved
  • Issue of the appropriate repayment (to include supplement where due) will be instigated
  • Issue of Tax Calculations (P800) for all years, other than those accepted as being ‘Reconciled - Balanced’ will be instigated

Alongside this the customer’s tax coding records will be reviewed to determine whether an underpayment (potential or actual) in respect of any of the years within the multiple year reconciliation has been coded out CY and / or later. Where it has coding will automatically be triggered to remove the amount concerned.