COG915640 – Example
1. Risk identified as Casuals who are really employees not shown on P35 for 2009-10 plus a risk on status for consultants for the same year. The PAYE/NIC due on the payments made is £7,000 and there is no evidence of such payments in earlier years.
2. We open an intervention on 12th August 2010 [therefore current year is 2010-11]. .
3. The risks are discussed with the employer who accepts that PAYE/NIC is due in respect of the payments described as casuals. Liabilities are agreed in respect of 2009/10 and the employer agrees to settle such liabilities by contact settlement and amend their payroll records tp account for the payments made to the 12/8/10. In this respect the CYA is calculated at £10,000. However the position regarding the consultants is still in dispute.
4. On 19th May 2011 the employer sends in a P35 for 2010/11 including the employees previously treated as casuals. Due to leavers the PAYE/NIC amounts to only £8,000. The Status issue still ongoing
5. In June 2011 we agree the consultants are self employed and we close the case. The employer continues to trade and continues to employ same kind of staff therefore tax liability continues
It is a SME case and it is considered that the employer failed to take reasonable care. Penalties are raised but subsequently suspended.
Yield equals -
Ø Class 6 contract settlement 2009-10 – £7,000 plus interest (penalty suspended so not scored). Recorded as cash to Bank
Ø Consequential Yield 2010/11 – yield £8,000. If the case had settled before the 2010/11 return was received then the CYA would have been made in the amount of £10,000 based on the evidence held. However because actual figures were subsequently submitted prior to the case concluding, then only £8,000 can be scored. This will be recorded in Caseflow as P35 Obtained and count as Cash to Bank.
Ø Future Revenue Benefit (FRB) additional liability of £8,000 for up to 24 months.