Reg 80 versus reg 72

The taxpayer company’s PAYE affairs were handled by a payroll business which made an error that led to its client deducting the wrong amount of tax for an employee.

HMRC issued a regulation 80 determination to collect the outstanding tax. The taxpayer appealed.

The head of the payroll firm claimed mistake was genuine there had been no wilful failure to deduct tax and the application of regulation 72 would be appropriate.

Reg 72 gives the Revenue the discretion to direct that an employer is not liable to PAYE due when failure to deduct the correct amount was the result of an error made in good faith.

The First-tier Tribunal said a request for reg 72 should state that reasonable care had been taken to comply with the regulations explain how the error occurred and specify the relevant payments and the staff member or members affected.