# PAYE Balancing Statement P21c



## Han Solo (19 May 2005)

Hello

Received the other day my P21c.  There was a small underpayment on my part.  But rather than say please forward a cheque in respect of the arrears.  The sentence in the bottom left  says something to the effect "I will not be seeking repayment of this underpayment" or something to that effect. (Sorry left it at home)  

Is this common ?

Are there certain limits below which Revenue don't chase ?

Any assistance greatly appreciated.

Many thanks


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## contemporary (19 May 2005)

I have had this myself, I dont know what the underpayment limit is, mine was 273 last  year, and 215 the year before.


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## maura (22 Nov 2005)

I have just received our p21 also and we underpaid by 375.25, it says at the bottom, "this underpayment will not be collected at this time", when will they look for it?  will it be taken from my husband's next pay cheque? If anyone knows could you please post as I tried ringing the tax office, got a machine that said try again later.


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## ClubMan (22 Nov 2005)

Maybe they will simply adjust your tax credits for next year to collect the outstanding amount rather than look for a lump sum payment now?


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## maura (22 Nov 2005)

Thanks clubman, ever efficient, that must be what they will do.  Thanks for that.


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## extopia (22 Nov 2005)

Why not ring or email them and ask? Adjusting individual tax credits sounds like a lot of work for the Revenue.


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## ClubMan (22 Nov 2005)

extopia said:
			
		

> Why not ring or email them and ask? Adjusting individual tax credits sounds like a lot of work for the Revenue.


Why? They have to process the individual's tax records anyway so making an adjustment shouldn't be much more hassle. They definitely do this sometimes - I remember myself and some colleagues being hit for _BIK _income tax on benefits accruing from discounted shares purchased under an _Employee Stock Purchase Plan/ESPP _and _Revenue _asked some of them for payment in a lump sum while they adjusted the tax credits for others  (including myself) to collect the liability over a few years. If you ever get a demand for a lump sum payment and it would cause hassle then ask them to adjust the tax credits instead to collect it gradually over a period of time. I can't imagine _Revenue _waiving their claim to outstanding tax liabilities other than when rounding figures to the nearest € as they often do.


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## ubiquitous (22 Nov 2005)

It *is* normal Revenue practice to waive collection of residual PAYE shortfalls such as the above. The notation "this underpayment will not be collected at this time" clearly indicates that this option is being exercised in this case. If the Revenue opt in a particular case to recoup a shortfall by adjusting future years' tax credits, then this is indicated on the P21.

Given that large numbers of civil & public servants (particularly those working for health boards & the Dept of Education) seem to have inadvertently underpaid PAYE amounts of €300 or so in 2004 (presumably due to errors in PPARS and similar systems), the Revenue probably have no option but to write off many of the sums concerned due to the volume of work and hassle that would be involved in recovering the underpayments


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## ClubMan (22 Nov 2005)

ubiquitous said:
			
		

> It *is* normal Revenue practice to waive collection of residual PAYE shortfalls such as the above. The notation "this underpayment will not be collected at this time" clearly indicates that this option is being exercised in this case. If the Revenue opt in a particular case to recoup a shortfall by adjusting future years' tax credits, then this is indicated on the P21.


 To be fair the orginial poster was not 100% sure of the wording and it could have actually been (could actually be) along the lines of what _maura_ posted above suggesting that the shortfall will be recouped at a later date (e.g. through and adjustment to the 2006 tax credits).



> Given that large numbers of civil & public servants (particularly those working for health boards & the Dept of Education) seem to have inadvertently underpaid PAYE amounts of €300 or so in 2004 (presumably due to errors in PPARS and similar systems), the Revenue probably have no option but to write off many of the sums concerned due to the volume of work and hassle that would be involved in recovering the underpayments


 The _BIK _tax involved in the _ESPP _that I mentioned above was in or around that sort of figure and Revenue did not waive collection of it.

Can anybody point to authoritative information (e.g. a _TCA _or tax briefing reference if applicable) that clarifies precisely in what circumstances _Revenue _waive collection of outstanding tax liabilities?


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## ubiquitous (22 Nov 2005)

> To be fair the orginial poster was not 100% sure of the wording and it could have actually been (could actually be) along the lines of what maura posted above suggesting that the shortfall will be recouped at a later date (e.g. through and adjustment to the 2006 tax credits).



I disagree. The P21, as quoted above, said clearly that Revenue will not pursue collection of the shortfall. Where Revenue opts to collect shortfalls by adjusting future tax credits, this is denoted *explicitly* on the P21. 

I cannot comment on your previous experience.


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## ClubMan (22 Nov 2005)

ubiquitous said:
			
		

> I disagree. The P21, as quoted above, said clearly that Revenue will not pursue collection of the shortfall.


Hardly 100% confident, eh?


			
				Han Solo said:
			
		

> The sentence in the bottom left says something to the effect "I will not be seeking repayment of this underpayment" or something to that effect. (Sorry left it at home)


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## ubiquitous (22 Nov 2005)

I repeat....



> Where Revenue opts to collect shortfalls by adjusting future tax credits, this is denoted *explicitly* on the P21.


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## ClubMan (22 Nov 2005)

ubiquitous said:
			
		

> I repeat....


 Yes - but this is what you disagreed with earlier:


			
				ubiquitous said:
			
		

> ClubMan said:
> 
> 
> 
> ...


 As I have shown _Han Solo _betrayed a certain lack of certainty about the precise wording of the document which leaves open the possibility of alternative valid explanations such as _maura's_. Once Han Solo has confirmed the precise wording of the document definite assertions on this specific matter might be more appropriate.


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## ubiquitous (22 Nov 2005)

What alternative valid explanation? Maura's P21 said that "this underpayment will not be collected at this time". Looks clear and cut & dried to me...


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## ACCK01 (22 Nov 2005)

As far as I know the rules go something like this:
Underpayment < 400  - underpayment will not be collected (However if this happens frequently then they may chase for money)
Underpayment between 400 and 2000 - future tax credits will be adjusted to collect any money outstanding up to 8 years in the future
Underpayment > 2000 - Request is made for payment of outstanding amount.
Each case would be dealt with on a case by case basis so the rules above are only guidelines.


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## ubiquitous (22 Nov 2005)

Thanks ACCK01 for that extremely useful clarification.


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## ClubMan (22 Nov 2005)

ubiquitous said:
			
		

> What alternative valid explanation? Maura's P21 said that "this underpayment will not be collected at this time". Looks clear and cut & dried to me...


 Yes _"at this time" _which suggests that it may be collected _"at a later time"_ rather than not at all - for example:


			
				ACCK01 said:
			
		

> Underpayment between 400 and 2000 - future tax credits will be adjusted to collect any money outstanding up to 8 years in the future


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## bullets (22 Nov 2005)

Would a P21 be a standard document?

If so, I guess the accountants who are posting here should probably have more knowledge of what the wording means as opposed to the literal wording



> Yes _"at this time" _which suggests that it may be collected _"at a later time"_ rather than not at all - for example:


 
Then again I could be wrong


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## ClubMan (22 Nov 2005)

bullets said:
			
		

> Would a P21 be a standard document?


If the rules outlined by _ACCK01 _are anything to go by then it would suggest that _P21s _would vary in content to some extent in the different situations described.


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## dam099 (22 Nov 2005)

bullets said:
			
		

> Would a P21 be a standard document?
> 
> If so, I guess the accountants who are posting here should probably have more knowledge of what the wording means as opposed to the literal wording


 
From my days in practice which admittedly is a good few years go now I found that sometimes different tax offices took different approaches to various matters, this could account for some of the different experiences.


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## extopia (22 Nov 2005)

Jeez Clubbie stop scaring away the real accountants!


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## angie (23 Nov 2005)

I had this before and it arose as far as I remember due to us having a 53 week payroll year and the tax credit having only been divided in 52 so in effect got an extra weeks tax credit.  Same comment would not collect at this time etc. However when we subsequently did a medical expenses claim for that year the claim was reduced by the amount outstanding


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## ClubMan (23 Nov 2005)

_Han Solo _- put us out of our misery and please quote your letter verbatim!


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## ACCK01 (23 Nov 2005)

Revenue has now incorporated PAYE into their existing IT system to allow an integrated view of all taxes for all customers. (BTW It has now become obvious if you are claiming for medical expenses and have VHI (though I know you can still claim both), claiming for rent relief and claiming for mortgage relief etc.)

Therefore AFAIK if you are due back a refund in, for e.g. VAT, CGT, IT  and now PAYE (for overpayment, MED1 expenses, MED2 expenses etc) and you owe Revenue money for whatever reason in another tax the refund should be reduced by the amount owed (again this is just a guideline).


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## Ham Slicer (23 Nov 2005)

Bloody hell, this has dragged on.

When a P21 issues with an underpayment there are a couple of statements that can appear on the bottom of the cert.

"This underpayment will be collected by reducing your tax credits for 2006 and 2007" - self explanatory

or

"The collection of this underpayment has been deferred" - This means the underpayment is so small that Revenue don't want a cheque and they won't be bothered adjusting your credits.  However, if you overpay in the following year, instead of refunding the full overpayment, they will collect the deferred amount and refund balance.


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## davidoco (1 Dec 2005)

maura said:
			
		

> underpaid by 375.25, it says at the bottom, "this underpayment will not be collected at this time",......................I tried ringing the tax office, got a machine that said try again later.


 
DONT ring them whatever you do,  if the man said they are not collecting it, they are not collecting it.  One of the reasons in my own relevant experience is the following;

Underpayment of 300 euro.  Issue P21.  Make a note to customer that you will deduct it from their tax credits, married couple, complicated, which one do you deduct it from, receive phone call from customer, why the underpayment, explain reason, reallocate underpayment to wife on a week one basis, no that doesn't suit, don't owe the money anyhow, hours spent on phone explaining, letter from TD asking why the mistake, whos fault etc etc etc etc etc, 

so it's just cheaper to let it go!


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## maura (6 Dec 2005)

Thanks davidoco for the advice.  I won't ring them again about this so.  Did you or do you work in a tax office? is this how you know all this info.  If this is concrete, you have made my christmas.


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## geri (19 Dec 2005)

Just to add to all this, I received balancing statements for 2002 and 2003 last week.  I only submitted returns for them this year.  Both of them showed small underpayments.  Something like 60 and 150 euros respectively.  The wording was that these sums would not be collected at this time.  Then two days later, I received a cheque from revenue for 116 euro. I'm assuming that I had an overpayment for 2004 but haven't received the balancing statement yet for that year.  When I do, I will check to see if my overpayment in 2004 has been reduced by the underpayment in 2002 and 2003.  Will get back on this when I get the next balancing statement.


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## legend99 (19 Dec 2005)

angie said:
			
		

> I had this before and it arose as far as I remember due to us having a 53 week payroll year and the tax credit having only been divided in 52 so in effect got an extra weeks tax credit.  Same comment would not collect at this time etc. However when we subsequently did a medical expenses claim for that year the claim was reduced by the amount outstanding



My understanding with the 53 week year was that you were actually entitled to an extra weekly credit and standard rate allowance but that you actually had to apply for it to be granted.


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## geri (17 Jan 2006)

*Re: PAYE Balancing Statement P21c - update*



			
				geri said:
			
		

> Just to add to all this, I received balancing statements for 2002 and 2003 last week. I only submitted returns for them this year. Both of them showed small underpayments. Something like 60 and 150 euros respectively. The wording was that these sums would not be collected at this time. Then two days later, I received a cheque from revenue for 116 euro. I'm assuming that I had an overpayment for 2004 but haven't received the balancing statement yet for that year. When I do, I will check to see if my overpayment in 2004 has been reduced by the underpayment in 2002 and 2003. Will get back on this when I get the next balancing statement.


In case anyone is still interested in an update, received my balancing statement for 2004. It showed an overpayment of 116 euros. They did not adjust it to take account of the previous two years underpayment. They refunded me the full amount of overpayment for 2004.


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## Han Solo (2 Feb 2006)

Apologies have been away and this thread may have run its course but if its of any interest.  The statement on the bottom right of my P21c said verbatim "I DO NOT PROPOSE TO COLLECT THIS UNDERPAYMENT" (Revenue used capitals). i.e. at this time etc did not feature. Have not yet received statement for for 2004.  Cheers


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## extopia (2 Feb 2006)

Thanks for the clarification Han. It's always good to hear from the original poster after many replies have been received.

May the force be with you.


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