In Champneys Tring Limited v HMRC [2017] TC 05685 the First-tier Tribunal (FTT) upheld a PAYE determination on an employer who operated an incorrect tax code.

If an employer fails to operate PAYE HMRC can raise a determination under Regulation 80 in respect of any underpaid tax.  HMRC may alternatively seek the underpaid tax from the employee under Regulation 72, see Regulation 80 and 72 assessments for PAYE

  • The taxpayer had employed a full time receptionist for 7 months in 2013/14.
  • Her employment contract stated that she could not take on any other employment, but she actually had a second job throughout.
  • The employer did not obtain and/or retain a form 46 or starter checklist, but they applied the normal tax code for the year on the assumption she had no other employment. PAYE was under paid.
  • HMRC issued an assessment on the employer for the under-deducted tax arising as a result.

The FTT upheld the Regulation 80 assessment on the employer:

  • The employer had not been overcharged PAYE: the amount was correct.
  • The assumption that any new full time starter would not have another employment demonstrated a lack of reasonable care in complying with the PAYE regulations.
  • There was therefore no basis on which HMRC could instead seek the tax from the employee instead.


Our guides:

PAYE Codes: starters / leavers and OT code

Regulation 80 and 72 assessments for PAYE

Case reference: Champneys Tring Limited v HMRC [2017] TC 05685

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