Open Wide – this may hurt

A very recent tribunal case may be of interest to employers who operate PAYE.  In this case a dental practice ‘Portslade Dental Care’, who subcontracted out the operation of their payroll to an agent, had failed to pass on relevant PAYE coding notices to the payroll agent, which led to an underpayment of PAYE by an employee.

HMRC decided, rather than collecting the tax from the employee, which can be rather hard work, to assess the amount onto the employer, under regulation 72(5), on the basis that the employer had not “taken reasonable care to operate PAYE in accordance with any PAYE code number issued by HMRC”

The employer appealed but the Tribunal decided in favour of HMRC. This was not helped by the failure of Portslade to show up to, or send representations to the Tribunal, thus creating something of an open goal for the taxman.

To date we have been able to successfully defend clients against the threat of assessment under the 2003 PAYE regulations by demonstrating that our client employers have taken reasonable care, and also that HMRC’s systems are often far from robust.

Contact – if you find yourself in a similar predicament or would like more information.