Since 1 January 2018, Revenue has been empowered to recover PAYE from an employer on a grossed-up basis where PAYE has not been operated correctly by the employer. Re-grossing is the term given to calculating a notional gross pay that would have given risen to the actual amount paid after deducting tax. Revenue has published a new Tax and Duty Manual which lists circumstances where re-grossing could occur where:

• The employer does not deduct PAYE on emoluments or payments made to an employee; or
• An employer disguises the emoluments paid. For example emoluments could be described as invoice payments, expenses, discounts or credits, or they could be paid from cash sales which are omitted from the employer’s books or records.

The guidance also includes some examples of scenarios when re-grossing will not apply and illustrates worked calculations on how re-grossing operates.