T09634 - [2025] UKFTT 01097 (TC)

HMRC may determine the amount of that tax to the best of their judgment, and serve notice of their determination on the employer.

A determination under this regulation must not include tax in respect of which a direction under regulation 72(5) has been made; and directions under that regulation do not apply to tax determined under this regulation.

A determination under this regulation may—

A determination under this regulation is subject to Parts 4, 5 and 6 of TMA (assessment, appeals, collection and recovery) as if—

…”.

Regulation 67G was in the Bundle and it reads:-

“67G Payments to and recoveries from HMRC for each period by Real Time Information employers

(1)

For each tax period, a Real Time Information employer must pay to, or may recover from, HMRC the amount arrived at under the formula in paragraph (4).

(2)

If the amount arrived at under the formula in paragraph (4) is a positive amount, the employer must pay the excess to HMRC.

(3)

If the amount arrived at under the formula in paragraph (4) is a negative amount, the employer may recover that amount either—

(a)

by deducting it from the amount which the employer is liable to pay under paragraph (2) for a later period in the tax year, or

(b)

from the Commissioners for Her Majesty’s Revenue and Customs.

(3A) Where a return for a tax period contains a correction under regulation 67E(5) (returns under regulations 67B and 67D: amendments) and paragraph (3) of this regulation applies, the negative amount is treated as having been paid to HMRC—

(a)

17 days after the end of the tax period in respect to which that return is delivered, where payment is made using an approved method of electronic communications, or

(b)

14 days after the end of the tax period in respect of which that return is delivered, in any other case.

(4)

The formula in this paragraph is A-B, where—

A is the sum total of the relevant amounts for each of the employer’s employees, and

B is amount A for the previous tax period in the tax year, if any.

(5)

For the purposes of paragraph (4), a “relevant amount” is the amount shown under paragraph 17 of Schedule A1 (real time returns) for an employee in the most recent return made in the tax year by the employer under regulation 67B (real time returns of information about relevant payments) or 67D (exceptions to regulation 67B) which contains information about that employee.

(5A) If the employer makes a return under regulation 67EA(3) (failure to make a return under regulation 67B or 67D) a “relevant amount” for the purposes of paragraph (4) is the amount shown under paragraph 17 of Schedule A1 (real time returns) for an employee in that return for the tax year to which that return relates.

(6)

In paragraph (5) “the most recent return” means the return which, as at the end of the tax period, contains the most up to date information under paragraph 17 of Schedule A1 about the employee.

(7)

This regulation is subject to regulations 67H (payments to and recoveries from HMRC for each tax period by Real Time Information employers: returns under regulation 67E(6)), 71 (modification of regulations 67G and 68 in case of trade dispute) and 75B (certificates under regulation 75A: excess payments.”

Paragraph 17 of Schedule A1 of the Regulations reads:

“The total net tax deducted in relation to the total payments to date in this employment”.

Part V of the Taxes Management Act 1970 (“TMA”) to which Regulation 80(5) refers includes section 50, and that section therefore applies to the Determination. It provides, so far as relevant to this case, as follows:

“(6)

If, on an appeal notified to the tribunal, the tribunal decides

(a)-(b)…

(c)

that the appellant is overcharged by an assessment other than a self-assessment,

the assessment…shall be reduced accordingly, but otherwise the assessment…shall stand good.

(7)

If, on an appeal notified to the tribunal, the tribunal decides

(a)-(b) …

(c)

that the appellant is undercharged by an assessment other than a self-assessment, the assessment…shall be increased accordingly.”

The Tribunal therefore has the duty to decide whether the appellant has been overcharged by the Determination, undercharged by the Determination, or neither, and to reduce, increase or confirm the Determination in consequence.

Regrettably, Regulation 53 was not in the Bundle, and since there was no P45 provided to the appellant in this case, it is relevant. It reads:

“No Form P45: subsequent procedure on issue of employee’s code

53—(1) On making any relevant payment to an employee falling within regulation 47 to 49E (procedure where no Form P45) after the Inland Revenue have issued a code to the employer for use in respect of the employee, the employer must deduct or repay tax by reference to that code.

(2)

For the purposes of paragraph (1) and regulation 66 (deductions working sheets)—

(a)

any total payments to date notified to the employer by the Inland Revenue are treated as if they represented relevant payments made by the employer; and

(b)

the total net tax deducted before the first payment made in accordance with this regulation is taken to be the sum of—

(i)

the total net tax deducted, if any, notified to the employer by the Inland Revenue, and

(ii)

any tax which the employer was liable to deduct from the employee’s relevant payments under regulation 47, 48, 49, 49C, 49D or 49E.

(3)

For the purposes of—

(a)

item 8 of Table 2 in regulation 36(4) (Form P45), and

(b)

regulation 55(4)(f) (Form P46)(Pen))

any total payments to date and total net tax deducted which are notified to the employer by the Inland Revenue must be treated as if they were relevant payments made to the employee by, and tax deducted by, the employer.

(4)

If the employee’s previous code was used on the cumulative basis, any amount notified to the employer under paragraph (2)(b)(i) must be added to the previous total tax to date for the purposes of regulation 23(8) (cumulative basis: meaning of previous total tax to date)”.

The appellant relies on the argument that it took reasonable care and acted in good faith. That is because Regulation 72 reads:

“Recovery from employee of tax not deducted by employer

(1)

This regulation applies if—

(a)

it appears to the Inland Revenue that the deductible amount exceeds the amount actually deducted, and

(b)

condition A or B is met.

(2)

In this regulation…

‘the deductible amount’ is the amount which an employer was liable to deduct from relevant payments made to an employee in a tax period;

‘the amount actually deducted’ is the amount actually deducted by the employer from relevant payments made to that employee during that tax period;

‘the excess’ means the amount by which the deductible amount exceeds the amount actually deducted.

(3)

Condition A is that the employer satisfies the Inland Revenue—

(a)

that the employer took reasonable care to comply with these Regulations, and

(b)

that the failure to deduct the excess was due to an error made in good faith.

(4)

Condition B is that….

(5)

The Inland Revenue may direct that the employer is not liable to pay the excess to the Inland Revenue.

(5A) Any direction under paragraph (5) must be made by notice (‘the direction notice’), stating the date the notice was issued, to—

(a)

the employer and the employee if condition A is met; …

(b)

the employee if condition B is met.

(5B) A notice need not be issued to the employee under paragraph (5A)(a) if neither the Inland Revenue nor the employer are aware of the employee's address or last known address…”.