{
  "url": "https://openlegislation.uk/profit-related-pay-shortfall-recovery-regulations-1988/note",
  "json_url": "https://openlegislation.uk/profit-related-pay-shortfall-recovery-regulations-1988/note.json",
  "legislation": "uksi/1988/640",
  "legislation_title": "The Profit-Related Pay (Shortfall Recovery) Regulations 1988",
  "legislation_url": "https://openlegislation.uk/profit-related-pay-shortfall-recovery-regulations-1988",
  "path": "note",
  "kind": "note",
  "number": null,
  "heading": "Explanatory note",
  "text": "(This note is not part of the Regulations)\nThese Regulations, which come into force on 19th April 1988, provide for the collection and recovery of an amount equal to the shortfall of deductions made under PAYE where:\n(a) payments of profit-related pay have been made to employees in accordance with a profit-related pay scheme registered in accordance with the Finance (No. 2) Act 1987, (for 1988/89 and subsequent years Chapter III of Part V, Income and Corporation Taxes Act 1988);\n(b) in consequence of the relief given by that Act less PAYE tax has been deducted from the payments made to the employees than would have been deducted if the scheme had not been registered; and\n(c) the registration of the scheme is subsequently cancelled with effect from a time before the relief was given.\nWhere a scheme is so cancelled the scheme employer may be required by the Commissioners of Inland Revenue to make a return within 60 days showing whether there is any shortfall in deductions of PAYE and, if so, the amount of it, and the sums attributable to each of the years concerned, if more than one (regulation 3).\nThe scheme employer is to pay an amount equal to any shortfall to the Commissioners of Inland Revenue within 60 days of being required to make such a return and it may be recovered as if it were PAYE tax which the scheme employer was liable to pay to the Collector (regulation 4).\nRegulation 5 provides that, when a return showing a shortfall has been made, a certificate given by an officer of the Commissioners shall be evidence of the amount that the scheme employer is liable to pay and that a certificate given by a Collector shall be evidence that such an amount is unpaid.\nRegulation 6 provides that where it appears to the Commissioners that there is an amount in respect of shortfall unpaid, they may determine that amount to the best of their judgment and that the determination shall be treated as if it were an assessment to income tax.\nRegulation 7 provides that if the scheme employer dies, his or her personal representatives are to do anything which he or she would have been liable to do under the Regulations.\nRegulation 8 provides (by amending the PAYE Regulations) that where employees are assessed to income tax under Schedule E (emoluments of offices and employments) the tax deducted from their emoluments by an employer is to be treated as increased by any shortfall relating to their pay which is recoverable from the scheme employer. Thus the shortfall will not be recoverable by the Revenue from the employee as a result of the assessment; but the employee will be precluded from obtaining any repayment in respect of it.",
  "extent": null,
  "status": null,
  "version": "current",
  "annotations": [],
  "outstanding_effects": [],
  "provenance": {
    "source": "legislation.gov.uk",
    "source_url": "https://www.legislation.gov.uk/uksi/1988/640/note",
    "retrieved_at": "2026-10-29T16:08:27.793968+00:00"
  },
  "licence": "Open Government Licence v3.0",
  "licence_url": "https://www.nationalarchives.gov.uk/doc/open-government-licence/version/3/",
  "attribution": "Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives."
}