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HMRC internal manual

PAYE Settlement Agreements

Irregularities:Items omitted or undervalued

You may discover items included in the PSA have been omitted or undervalued. For example, the employer agreed to include all Christmas gifts to employees but you discover that only half the gifts were included or alternatively that the cost of the gifts was undervalued in the agreement.

Where you identify such cases check with the employer if they operated PAYE or reported the benefit on form P11D. Then

  • tell the employer that the items are covered by the PSA and that means the employer is liable for the tax and NICs due
  • establish whether the employer wishes the PSA to continue for those items
  • do not enforce the PSA where tax has been paid by another method
  • where the tax has not been paid by another method and the amounts due are substantial consider a Regulation 110 determination to recover the shortfall. See PSA4000 for guidance relating to Regulation 110 determinations.

Where errors bring into doubt the employers general operation of PAYE consider whether the employer would benefit from customer liaison or referral for an Employer Compliance Review.