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DMBM520485 | Debt and return pursuit: PAYE: in-year process: IDMS actions: automatic compliance activity to establish the debt (P101)

From HM Revenue & Customs · Debt Management and Banking Manual

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In order to establish the debt IDMS will issue either a P100 or a P101. IDMS will carry out an automatic calculation based on amounts previously paid for the current tax year. The total payments of tax and NIC made for the year concerned divided by the number of months they cover, multiplied by the number of months for which payment is overdue.

For example - £30,000 in total paid for Tax and NIC months 1-3, and months 4 and 5 are presently outstanding. Calculation will be - £30,000/3 = £10,000 x 2 = £20,000.

If no payments paid in the current tax year, the amount on the previous tax year’s employer’s annual return (228 charge posting) divided by the number of months this return covered multiplied by the number of months for which payment is overdue.

For example - £5,000 shown for Tax/NIC on the previous year’s return, which covered 10 months (employer did not start employing until month 3), and month 1 is presently outstanding. Calculation will be - £5,000/10 = £500 x1 = £500.

If no current tax year payments or previous year’s return (228 charge posting) is held then use any amounts paid for the previous tax year. The total payments of tax and NIC made for the previous year divided by the number of months they cover multiplied by the number of months for which payment is overdue.

For example - £120,000 in total paid for Tax and NIC months 1-12 of the previous year, and months 1-3 of the current year are presently outstanding. Calculation will be - £120,000/12 = £10,000 x 3 = £30,000.

IDMS will then check if the debt is £1,600 or above.

If below £1,600, IDMS will issue form P100.

If £1,600 or above, IDMS will:

  • reduce the ‘other’ amount due on IDMS to £0.00

  • record the specified amount as the actual value of the work item(s)

  • issue form P101.