PAYE96310 - Reconcile individual: simple assessment: voluntary payments

The introduction of Simple Assessment is aimed to replace the PAYE voluntary payment process. However, any record where a voluntary payment letter (VPL1 or VPL2) has been issued, even where it has been suspended, will continue to follow the voluntary payment process unless the year is re-reconciled as a Simple Assessment. Any existing voluntary payments made by the customer will be included in the EOY tax calculation as follows.

Before an underpayment is collected by Simple Assessment the system will check for any existing unallocated voluntary payments held on NPS. This can be combined with any overpayments from other years to reduce or clear the underpayment.

The system will check the following:

• If the existing voluntary payment(s) would clear the underpayment
• If the existing voluntary payment(s) would reduce the underpayment enough so that the remaining underpayment balance can be coded

If any of the above conditions are met the system will allocate the voluntary payment to the tax year, in line with PAYE processing. A Simple Assessment charge will not be created.

Example: remaining underpayment can be coded:

Tax due £3000.

Unallocated voluntary payment on NPS £2000.

Reduces underpayment to £1000.

Now included in CY+1 code – no Simple Assessment is created.

Any existing voluntary payment that is less than the underpayment amount in the tax year, that does not fit with any of the above criteria, would be refunded to the customer and a Simple Assessment issued for the full underpayment amount due.

Example: remaining underpayment cannot be coded:

Tax due £3000.

Unallocated voluntary payment on NPS £2000.

Reduces underpayment to £1000. The £1000 cannot be coded.

£3000 sent to Simple Assessment and £2000 voluntary payment refunded to the customer.