PAYE96250 - Reconcile individual: reconciling CY-6 to CY-2: reconciling multiple years - reconciling years including CY-6 to CY-5

With effect from April 2012, tax calculations for CY-6 and CY-5 should not be issued. The exception to this would be if a customer makes a valid claim - see PAYE93001 and the tax calculation shows that the customer is overpaid, or it reduces an underpayment previously notified to them, for that year.

The results of each year should be considered in isolation and where a calculation is issued for either year the result should be taken forward to CY-4 for inclusion within / alongside a multiple year reconciliation.

To allow you to review the results of CY-6 and / or CY-5 in isolation before you determine whether or not you need to issue calculations for the year (s) concerned through the PAYE Service you should prepare a calculation for the year using the SEES P800 PAYE Calculator and where the calculation is

  • The first undertaken for the year and it results in an underpayment, you will not need to issue a calculation through the PAYE Service for the year
  • The first undertaken for the year and it results in an overpayment, you will need to issue a calculation through the PAYE Service for the year
  • A re-reconciliation for the year and it results in a reduced amount of underpayment, you will need to issue a calculation through the PAYE Service for the year
  • A re-reconciliation for the year and it results in an increased amount of underpayment, you will not need to issue a calculation through the PAYE Service for the year
  • A re-reconciliation for the year and it results in an overpayment, you will need to issue a calculation through the PAYE Service for the year

As you are dealing with each year in isolation, where you are reviewing both CY-6 and CY-5, the conditions above should be applied to the results of the SEES calculations for each year separately. For example, in a case where both years were previously ‘Reconciled- Balanced’ and the SEES calculations show that (in isolation) the customer is now overpaid by £1,000 in CY-6 and they are underpaid by £500 in CY-5, you should issue a calculation through the PAYE Service for CY-6 only.

Having established whether or not CY-6 and / or CY-5 calculations should be issued through the PAYE Service, you will then need to update the customer record and trigger the reconciliations to take place. How you will need to do this depends on the year(s) you are required to issue calculation through the PAYE Service for and where the SEES calculations show that

  • Calculations should not be issued for either CY-6 and / or CY-5, you should proceed as follows
  • Do not trigger reconciliations on the PAYE Service for either year
  • Manually set both years to ‘Reconciled - Balanced’
  • File the SEES calculation in DR storage
  • Update Contact History with details of the action taken
  • If required, that is if your review needs to cover CY-4 onwards, rebuild the customers records for the years concerned as required and trigger a multiple year reconciliation from CY-4
  • A calculation is not required for CY-6 but it is for CY-5 you should proceed as follows
  • Do not trigger a reconciliation on the PAYE Service for CY-6
  • Manually set the year to ‘Reconciled - Balanced’
  • File the SEES calculation in DR storage
  • Update Contact History with details of the action taken
  • Rebuild the customers records from CY-5 as required and trigger a multiple year reconciliation from CY-5
  • A calculation is required for CY-6 but not for CY-5 you should proceed as follows
  • Do not trigger a reconciliation for CY-5 on the PAYE Service
  • Manually set year to ‘Reconciled - Balanced’
  • File the SEES calculation in DR storage
  • Update Contact History with details of the action taken
  • Rebuild the customers records for CY-6, trigger reconciliation and approve the resulting tax calculation for issue
And then 
  • On the same day rebuild the customers records from CY-4 onwards as required and trigger a multiple year reconciliation from CY-4

For both CY-6 and CY-5, where you are not required to issue a tax calculation through the PAYE Service and the year is being reviewed as a result of a request made by the customer, you should issue a manual calculation (using the SEES P800 PAYE Calculator) for the year(s) concerned along with a letter explaining that due to a change in legislation, no action will be taken to collect the underpayment(s) arising.

CY-5 and CY-6 Auto processing – Simple Assessment

From November 2019 Simple Assessment auto processing has been developed to include multiple year reconciliation (starting from tax year 2016/17). This process includes where previously carried forward underpayments from an earlier year can be included in a simple assessment charge PAYE96300.

Where a carried forward underpayment has been included in a Simple Assessment charge and the carried forward amount changes, where the original year the underpayment arose is now in CY-5 and/or CY-6 the Simple Assessment charge will update as follows:

  • Where the underpayment is reduced or the CY-5 or CY-6 year becomes balanced or overpaid, this will be reflected in the Simple Assessment year.
  • Where the underpayment in CY-5 or CY-6 increases the carried forward underpayment included in the Simple Assessment year will not change to include the increased underpayment.

A Simple Assessment charge will not be raised or increased in a tax year which now falls in to CY-5 or earlier. As a result any changes to the CY-5 and CY-6 calculation as follows will not be included Simple assessment charge. For further information see PAYE96330.