PAYE96355 - Reconcile individual: simple assessment: coding
Where a year is reconciled underpaid NPS will trigger a hypothetical coding check to see if the underpayment can be collected by the individual’s tax code. See coding rules (PAYE12070). Where NPS is unable to code an End of Year reconciled underpayment, the PAYE system will send the underpayment to ETMP to be collected by Simple Assessment.
Annual coding
The annual coding process will include a check to determine if there are any existing underpayment(s) coded out to CY+1. Where PAYE annual coding rules determine the underpayment can be included in the tax code, the annual coding process will continue to run.
Where the coded out underpayments can no longer be included in the tax code, the coded out status of the underpayment is cancelled and the underpayment will be sent back to the originating year(s) where the underpayment(s) arose. This will trigger simple assessment processing. Annual coding will run without any underpayments coded out into the year.
The system will continue to review if the underpayment can be coded as follows:
- Where annual coding has run and there is a further coding trigger to check if the underpayment can be coded, before 15 March. A coding check will take place for CY and CY+1.
- Where annual coding has run and there is a further coding trigger to check if the underpayment can be coded, after 15 March and before 6 April the coding check will take place for CY+1 and the CY will not be reviewed.
In year Adjustments
Where the year being reconciled includes a coded out In Year Adjustment (IYA) and part or all of the In Year Adjustment has been paid, and the year is reconciled as underpaid the system will check if the tax paid in the year covers the amount of the In year Adjustment.
Where CY+1 includes an In Year Adjustment created in CY which during processing is allocated to CY+1 for collection, this value will not be cancelled at annual coding. Annual coding will run including the carried forward In Year Adjustment.
Where the tax paid during the year includes IYA receipts to cover the total IYA amount, the amount paid and the IYA will be included in the tax calculation. If not enough tax has been paid to cover the IYA charge the IYA will be cancelled. The system will then check if the remaining balance can be coded or will check if the total underpayment amount is within PAYE tolerances to balance the year before it is recorded as a Simple Assessment year.