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When the special procedures apply and what they entailThe special procedures must be applied to employees who are absent from work because they are either: • taking part in a trade dispute, or
• laid off and have a direct interest in a trade dispute. The special procedures for such employees are as follows: • you must withhold any tax refunds due to the employees
for as long as they are involved in the trade dispute. This applies even if an employee becomes sick after the trade dispute starts
• you pay any tax refunds that you have withheld only when one of the following circumstances arise — the employee returns to work
— the employee leaves your employment — the employee dies.
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How to decide if an employee is involved in a trade dispute or lock-outIt is up to you, the employer, in the first place to decide if an employee is involved in a trade dispute. Make your decision in the same way as you do for a report called for by Jobcentre Plus, and contact them if you are in any doubt or difficulty.
Where you decide an employee is involved in a trade dispute but he or she disagrees, advise the employee to contact Jobcentre Plus. If they uphold the employee’s view they will give the employee written confirmation that he or she is not disqualified from receiving Jobseeker’s Allowance for being involved in a trade dispute.
Where an employee produces such written confirmation: • you cannot treat the employee as being involved in a
trade dispute
• the special procedures do not apply and you must pay the employee any tax refunds due.
51
Working out PAYE during the trade disputeIf you are not paying anything to employees involved in a trade dispute you may put off working out their PAYE until the earlier of the end of the trade dispute or 5 April. If you do put off working out their PAYE:
• you will not be able to deduct from your payments to the accounts office (see paragraph 52 below) any refunds you have withheld
• where during the dispute an employee leaves your employment or dies, you must work out his or her particular PAYE in the normal way, and:
— pay any refund due including any refund withheld in a previous tax year
— complete form P45 in the usual way.
If you are paying anything to employees involved in a trade dispute or you are not paying them anything but nevertheless choose to work out their PAYE, you must: • make the PAYE calculations in the normal way • where the PAYE calculations:
— show that a tax refund is due, withhold the refund from the employee
— show that tax is deductible, make the deduction from any pay the employees are receiving. Any tax deductible should be reduced by any tax refund that you are already withholding from the employee. Remember, however, to reduce the amount of refund owed to the employee by the amount used by the set-off.
52
Payments to the accounts office during the trade disputeDuring a trade dispute the procedures that apply in relation to the payments you make to the accounts office are as follows:
• payments you have made to the accounts office for any tax month (or quarter where appropriate) ended before the trade dispute started, are not affected by the trade dispute
• you must continue to make your monthly (or quarterly) payments to the accounts office during the trade dispute • if you are owed money because you made tax refunds
before the dispute started but did not make a claim to the accounts office, you may deduct what you are owed from any amount you are due to pay to the accounts office during the trade dispute.
If you have put off working out the tax refunds due to your employees, you will need to do your calculations at the earlier of:
• the end of the dispute, or
• when you complete your final submission for the tax year.
Tips paid by the customer
Does the employee keep the tip without involving the employer or tronc?
Does the employee have a contractual right to a precise amount of money sourced from tips and receives no more or less than they are contractually entitled to?
Yes
No Does the employer decide which employees will get the money and how much each employee will get?
NICs are due No NICs are due
No
No
Yes
You can then deduct the refunds from the payments to the accounts office and/or claim what you are owed back from the accounts office, who will deal with the matter urgently.
If you have chosen to continue as normal to work out the tax refunds due to your employees you should observe the following procedures when making your monthly (or quarterly) payments to the accounts office:
• you may deduct from your payments to the accounts office, any refunds you actually make to employees because they are no longer involved in the trade dispute. (Remember, however, not to deduct from your accounts office payment any amount of withheld refund you have previously deducted under the procedure below)
• you may deduct from your payment to the accounts office, but only for the month (or quarter if appropriate) in which the refund arises, any refunds calculated but withheld
• where the amount of withheld refunds exceeds the tax due for that month (or quarter) you may deduct the excess from any payment of NICs due
• where the amount of withheld refunds exceeds the tax and NICs due for that month (or quarter), the excess refunds cannot be deducted from any subsequent payment to the accounts office or be claimed back from the accounts office until the refunds have actually been made to the employees.
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Trade dispute ends in the same tax year it beganIf the trade dispute ends in the same tax year it began, take the following action:
• pay any refunds that you have withheld as soon as possible after the employees return to work
• follow the procedure at paragraph 55 for any employee whose withheld refund you cannot pay
• work out how much you owe to, or are owed by, the accounts office. Remember to allow for any deductions from payments to the accounts office that you have already made
• where your calculations show that you are owed by the accounts office you can either:
— deduct the amount you are owed from future payments you make to the accounts office, or — claim the money back from the accounts office who
will deal with your claim urgently. Your claim must be in writing and show how you have worked out the amount you are claiming.
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Procedure at the end of the tax year if the trade dispute has not endedYou must take the following action at the end of the tax year if the dispute has not ended:
• fill in the normal final submission for the year as if you had actually paid the refunds you are withholding • complete form P60 to give to the employee, by 31 May
and, either:
— enter a single figure of tax deducted on form P60 and give the employee a statement of tax withheld on form P61, or
— give a separate statement on form P60 of the tax withheld and give the employee a form P62
• continue, for the following tax year, to — carry out normal PAYE calculations
— withhold the tax refunds for as long as the employee is involved in the trade dispute.
You can get forms P61 or P62 from HMRC National Insurance Contributions & Employer Office.
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Procedure for employees whose withheld refunds you cannot pay at the end of the trade disputeWhere an employee does not return to work at the end of the trade dispute, and you do not know where he or she is, you will not be able to pay the withheld refund to the employee. You should take the following action in such circumstances:
• pay to the accounts office any tax you have not refunded to an employee within 42 days of the end of the trade dispute
• include the figure of tax not refunded on the FPS • where the final FPS for a year has been submitted you
will need to submit an EYU showing the amount of tax which has not been refunded.
Chapter 3 – National Insurance only procedures
The following guidance applies to all Employers. Guidancefor reporting PAYE in real time is also available at, www.hmrc.gov.uk/payerti/index.htm