HMRC consultation on simplifying the PAYE Settlement Agreement (PSA) process

HMRC published a consultation that set out proposals to reform the PAYE Settlement Agreement (PSA) process, to:

  • make it simpler for both employers and HMRC to administer PSAs
  • provide greater clarity about what can and cannot be included in a PSA.

The Government did not propose to extend the scope of what can be included in a PSA as part of this consultation. However, this will be kept under review.

In December 2016, the Government published a summary of responses document which concluded:

  • Overall, respondents welcomed the proposals and the opportunity to comment on them.
  • Respondents welcomed the proposal to remove the requirement to agree PSA items in advance, every year and the majority would like the paper return, used currently, replaced by a digital return.
  • Many respondents would like better guidance that could assist employers in establishing what benefits are appropriate for inclusion within a PSA.
  • Many respondents expressed disappointment that the government did not propose to consider extending the scope of what can be included in a PSA, as part of this consultation.
  • One option that the government is considering is the alignment of the PSA calculation and payment dates with the P11D/P11D (b) deadlines. The majority of those expressing a view on this option were not in favour of it. In their view, it would impose an unreasonable burden on employers.
  • Many respondents said that removing the ‘minor’ criterion could potentially exclude some items that do not readily fit within the remaining PSA criteria.