Assessment to tax

The appellant company provided an administrative and financial outsourcing service for clients' businesses and agencies. As part of these services it paid the clients' employees accounting for PAYE using its own employer's PAYE reference rather than the client's. The appellant told HMRC that for 2005-06 there had been underpayments of PAYE due of £350 000. HMRC said that the appellant had to remit these underpayments under the individual employer's PAYE reference for each agency rather than collectively.

The appellant appealed saying it was entitled to operate the PAYE system in the way that it had. A preliminary issue arose as to whether the Special Commissioners had jurisdiction to hear an appeal from the disputed decision. The appellant said that 'assessment to tax' in TMA 1970 s 31(1)(d) meant not only an amount of tax but also an assessment of a state of...