Explanatory note

These Regulations amend the Income Tax (Pay As You Earn) Regulations 2003^f1 (the “PAYE Regulations”).

When an employer does not receive an income tax Form P45 (cessation of employment) for a new employee, they must both provide information to HM Revenue & Customs using the income tax Form P46 procedure. Regulation 3 introduces a modified and tailored Form P46 procedure for seconded expatriates who start work in the United Kingdom on 6 April 2009 or later^f2.

The amendments in regulations 4 to 8 are consequential upon the introduction of the new Revenue and Customs powers of inspection and production of documents in Schedule 36 to the Finance Act 2008.

Regulations 4, 5, 7 and 8 make consequential amendments required as a result of the changes made by regulation 6 which substitutes a new regulation 97 of the PAYE Regulations. This keeps the existing definition of an employer’s “PAYE records” but, instead of requiring their production, requires them to be kept and preserved. These records will thus constitute “statutory records”, so Schedule 36 to the Finance Act 2008 will provide the power to require their production and to inspect.

Regulation 9 amends regulation 90 of the PAYE Regulations which requires employers to provide information to HM Revenue & Customs about company cars they provide to employees. It removes the requirement to do that if one car is replaced with another, such as with an upgrade to a newer model.

This will only affect the quarterly in-year return; there is no change to the Form P11D annual return about which regulation 85 makes provision.

The opportunity is taken to update the reference to Inland Revenue in paragraph (2) of regulation 90 to Her Majesty’s Revenue and Customs.

The simplified Pay As You Earn income tax scheme operated by the Ministry of Defence for payments to members of the reserve forces is stopped for payments made on 6 April 2009 or later^f3. Such payments become subject to the ordinary PAYE rules.

A full Impact Assessment of the effect that this instrument will have on the costs of business and the voluntary sector is available at www.hmrc.gov.uk and is annexed to the Explanatory Memorandum which is available alongside the instrument on the OPSI website.