PAYE operates very effectively most of the time but when things go wrong sorting them out can be surprisingly complex. In Sci-Temps Ltd v HMRC [2020] UK FTT 314 (TC) insufficient tax was deducted from an employee’s pay and HMRC looked to the employer to meet the liability. Although the amount was relatively small (£629) the employer appealed because it believed that it had followed correct procedure and that HMRC was at fault. The FTT undertook a close analysis of some important parts of the PAYE regulations and decided on a number of grounds that HMRC’s interpretation was wrong. Anybody involved in payroll matters should study the decision carefully – particularly for its illuminating analysis of what makes up a tax code. HMRC was rightly criticised in the decision for reliance on an out of date version of the legislation and...
