Sort it out amongst yourselves
Feedback. We are hearing reports of the Taxman’s visiting compliance officers seeking to overturn PAYE Settlement Agreements (PSAs) that have been properly entered into with local tax offices.
Recap. Under a PSA an employer pays grossed-up tax and Class 1B, i.e. employer only NI at 12.8% (payment due October 19, following the end of the tax year) on certain unusual payments made to employees. Under a PSA you are bearing some or all of the employees’ tax liability.
Rule of thumb. Provided the legal requirements are not breached, then it seems to us that negotiated agreements to pay tax are sacrosanct, at least until the time comes for a possible renewal.
Tip 1. If you have a PSA in place don’t panic. The cases so far relate to unapproved shares and relocation packages. If your PSA isn’t in relation to these, you’re fairly safe.
Tip 2. If a visiting compliance officer has a personal view that they would not have entered into a particular agreement if it had been up to them, then that would seem to be a matter for them to advise the local office upon as to future conduct (rather than discuss it with employers who have done nothing wrong). So politely ask them to discuss it amongst themselves before telling you you’re in the wrong.
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