The reason you are getting this exception is due to fact that there hasn’t been a reason specified as to why some of your employees aren’t paying tax. The IT3a Reason code can be added in one of 2 ways:
- Directly on the employee masterfile screen.
- When closing the Exception report.
Adding the reason code on the masterfile:
- Click on Edit
- Click on Employee Masterfile
- Click on the magnifying glass and select the employee you want to enter the reason code for
- Click on the Tax Tab
- Click on the Drop Down nex to IT3(a) Reason Code and select the reason why this employee does not pay PAYE:
Adding the reason code after closing the exception report:
- Click on View, Statutory Reports, IRP5/IT3a Exception Report
- On the filter screen filter for all of your employees (everyone to appear on the Right hand side).
- Click on the Print To drop down and select Screen, click on the Print Status drop down and select Both.
- A Message ‘The IRP5/IT3a Exception report has detected that IT3a Reason Codes have not been specified for some employees. Do you wish to specify them now?’ Will come up.
- Click on yes, select the reason why these employees aren’t paying PAYE (eg. Income below threshold) and save the changes.
NOTE: We can not advise you why the specific employee does not pay tax. In most cases it it because the employees income is below the tax threshold - if however you are unsure about the reason please reach out to your Tax Practitioner.