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HMRC internal manual

PAYE Manual

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HM Revenue & Customs
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Accounting: end of year: SA underpayments

Self Assessment underpayments that are suitable for coding out are transferred from Self Assessment to the PAYE Service by one of two routes

  • Automatically through SA
  • Manual input by a permitted user

Transferring in SA underpayments

The PAYE Service receives underpayments automatically; the system will check if the underpayment can be coded CY+1 and if it can it will show a status of ’Coded’. If it cannot be coded work item 93 will be produced, see action guide tax40046 WI093.

The PAYE Service also allows permitted users to manually input SA underpayments. This can be done from the Financial Events Summary screen by using the action link Insert Underpayment to insert the underpayment onto the year to which the SA return relates. When the details are submitted, the system will check if the underpayment can be coded CY+1. If it can, the Financial Events Summary screen displays the message ‘The CY+1 code will be adjusted’. The underpayment will then show a status of ‘Coded’. Details of the coded out year will not appear in Accounting screens, however the underpayment will show in CY+1 Coding History after the code has been issued.

For cases where an SA underpayment / balancing charge is outstanding and an earlier year than the SA underpayment / balancing charge is then reconciled / re reconciled on NPS, the SA charge will be accounted for in the earliest NPS calculation (PAYE93005).

For information on migrated years please see PAYE98025.

Increasing SA underpayments

The PAYE Service allows you, if permitted, to manually increase SA underpayments. This can be done from the Financial Events Summary screen by using the action link Insert Underpayment to insert the additional amount of underpayment onto the year to which the SA return relates.

Reducing SA underpayments

The PAYE Service allows you, if permitted, to reduce SA underpayments coded in CY or CY+1 with a status of ‘outstanding’ or ‘coded’, by transferring the balance back to CESA.

This can be done from the Financial Events Summary screen by using the action link Cancel Underpayment, select reason ‘transfer to CESA’ and overwrite the total underpayment with the amount the underpayment is being reduced by, for example

Original SA underpayment £300.00

Revised SA underpayment £200.00

Difference to be entered £100.00

Note: Where you need to reduce an SA underpayment held in accounting to a lower amount that has a status of ‘Carried Forward’, a notional tax credit should be given in the first year where the SA underpayment is being carried forward to, for example

07-08 SA underpayment £291.00, status Carried Forward no longer due, paid in SA

09-10 reconciled and 07-08 SA underpayment shown at start of year

Insert notional tax credit following guidance at PAYE93036 in IABD landing 09-10.

Note: Where the CESA underpayment has status coded out CY or CY+1 you should record revenue loss TYPE 15.

Checks made for coding

Coding checks will be done automatically by following existing processes and will use the values held to check that

  • The outstanding underpayment to be included in the code does not exceed £2999.99
  • The outstanding underpayment to be included in the code does not cause the tax liability for the source against which the underpayment is to be coded to be doubled
  • The outstanding underpayment to be included in the code does not cause the tax liability to become more than half the estimated pay
  • A live employment exists
  • Potential underpayments will not be included in the code at annual coding where there is a current live SA link

Returning SA underpayments

If the SA underpayment cannot be coded it will be given a status of ‘Outstanding’ and you will receive an advisory message. The underpayment can be returned through the Underpayment Details screen Cancel Underpayment action link. The Financial Events Summary screen will then show a status of ‘Cancelled’. Please see the Self Assessment Manual SAM140030 for additional guidance.

Where a request is received to transfer an SA underpayment back to SA, the PAYE Service allows you, if permitted, to cancel an underpayment coded CY or CY+1 with a status of ’outstanding’ or ’coded’. This can be done from the Financial Events Summary screen by using the action link Cancel Underpayment.