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HMRC internal manual

Self Assessment Manual

HM Revenue & Customs
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Transfer of liability: regulations 72/81 and SA: regulation 80(2) determination

The office responsible for processing the employer’s End Of Year return may make a Regulation 80(2) determination if it appears PAYE tax is underpaid. This may happen, for example, where bonuses are suspected or known to have been paid to Directors but the employer has not accounted for the tax.

The determination

  • Is in terms of tax
  • Is calculated on estimated remuneration when company accounts details are not available
  • Uses the code that the employer should have operated during the yearFacts affecting the code that subsequently come to light (say from a personal return submitted late) are not normally taken into account. Exceptionally such additional facts may be taken into account on the grounds of equitable liability.

Having made a Regulation 80(2) determination, the office with processing responsibility is precluded by Regulation 80(3) from seeking a Regulation 72(5) direction. It is for the Recovery Office to pursue the employer for payment of the tax charged by the Regulation 80(2) determination.

The determination becomes final

  • After the 30 days appeal period has expired, in the absence of an appeal


  • By Commissioners determination of the appeal


  • By agreement, and determination of the appeal

PAYE benefit

The Regulation 80(2) tax attributable to a particular taxpayer represents a benefit to that taxpayer under either

  • Section 222(2) ITEPA 2003 (tax unpaid on notional payments in respect of any employee) in the year in which the 30 day ‘make good’ period ends, or
  • Section 223(4) ITEPA 2003 (tax paid on behalf of directors) in year of payment by the employer or, if applicable, the year the employment ceased if it ceased before the payment yearThat benefit should be included in the calculation of liability under SA for the appropriate year.

This is because the taxpayer’s pecuniary liability has been met by the employer. Where the taxpayer claims that he or she paid or made good the tax charged under Regulation 80(2), and within the time limit for Section 222 purposes, evidence to substantiate the claim is required. Where acceptable evidence is provided, there is no longer a chargeable benefit to assess in this respect.