SG33300 - Calculating the amount of security: the quantum calculation - PAYE/NICs: estimating future revenue risk where payment information is not up to date

When you do not have up to date payment information you may have to use other methods to get the figures you require.

To calculate 1 month’s PAYE/Class 1 NICs liability you could use one or more of the following methods

  • The Estimated Monthly Yield (EMY) calculation that is employed using Business Review of Collection Service (BROCS) is a tool that can assist you, seeDMBM520200.

For example, we know there are a minimum of 20 employees. The EMY for 15-24 employees is £2,500.

  • Get access to the employer’s wages records or a remittance payslip booklet/record for the current tax year to see exact amounts of PAYE/Class 1 NICs due.
  • View the employer’s end of year P35 return for the previous tax year, which is due to be filed by 19 May, and calculate a month’s PAYE/Class 1 NICs liability.

Where employers have never filed a return, perhaps because they have operated in the hidden economy or are phoenix traders, the following methods can be used to calculate 1 month’s PAYE/Class 1 NICs liability

  • The average monthly amount of PAYE/Class 1 NICs lost in the employer’s previous insolvency should be available from their Insolvency Practitioner.
  • If the wages figures are known (or can reasonably be estimated based on reliable information and/or documents/records), you should calculate the PAYE/Class 1 NICs due based on a middle rate of 20% for income tax and 23.8% for NICs (as at 2012-13). You should take into account the personal tax allowance (2012-13 £8,105) and the threshold for Class 1 NICs (2012-13 £7,605) before applying the 43.8% combined rates to the wages figures.
  • Assess the type of business and the number of employees using all available information, whether by examination of prime business records or third party information.

Whichever method you use your quantum calculation should be reviewed should any new information become available from the employer, or from any other source.