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HMRC internal manual

Debt Management and Banking Manual

Debt and return pursuit: PAYE: cessation, cancellation and Cancelled One Year Only (COYO): cessations - In Year cessation return received

An in-year cessation return is a return that has been submitted before the end of the tax year to which it relates to. So, for tax year 2010-11 a cessation return received after 6 April 2010 but before 5 April 2011 would be an in year cessation return.

Online cessation returns

Online Returns filed in-year are notified to CEPT (Central Exception Processing Team) who will send a CA8424 form to DMB advising of receipt of the return. On receipt of the form:

  • view the return on the E-Service Filestore to establish the amount due
  • check the amount due against the payments made on BROCS and then follow PAYE SWI 7 in DMSS5360.

Paper cessation returns

If you receive a paper cessation return, you should:

  • stamp the front of the return with the date of receipt
  • apply the first quality standard check QS1
  • enter the date of receipt of the return onto EBS using the ‘Record Return Receipt’ (RRR - ‘logging’) function
  • ensure that receipt of return is only logged once on EBS.

QS1 Quality standard check

You must apply QS1 check to all paper returns before you record return receipt (RRR) on EBS. The check required is shown in the PAYE Online Manual PAYE40016 - Employer Returns - Quality Checks - Checks prior to Recording Receipt of a Return -Action Guide.

The check determines:

  • whether the return has been made on correct stationery
  • whether the entries on the return are clear and legible
  • if any action is required before the return is recorded as received
  • the type and classification of the return.

EBS ‘Record Return Receipt’ (RRR) function

The function allows you to:

  • record receipt of a paper return, or part return for example a P35 has been received but the P14s have not
  • note if it passes or fails the quality check.

This information will update EBS and ChRIS Tracking Tool, and for successful cases, BROCS. If you make an error, you can correct this using EBS Function AMEND / DELETE EOY RETURNS RECEIPT.

When using function RRR to receipt a return that passes QS1, it is important that returns are receipted at the correct RSI (Return Status Indicator). This will ensure that a P228 is produced and sent to the office in receipt of the return. (You can find more information regarding the P228 at PAYE41020).

To use the RRR function you must be allocated the (EBS) Receivables user role via SRS, and you can access this through Interim Single Sign-on / CSP (Computer Support for PAYE).

Further guidance on using this function is located at PAYE Online Manual (PAYE41041) - Employer Returns - Record Receipt of Employer Return - Action Guide.

Actions after using RRR on EBS

For failed returns:

  • send the return and failure letter EOY3 (from SEES) to the employer, even if the return was submitted by the agent - although in these cases you should send a copy of the failure letter to the agent
  • note the reason for failure on the EBS function ‘RRR’.

For passed returns:

  • note ‘Cessation Return’ at the top of the P35
  • retain the return until the form P228 is received (early April), then
  • link the return to the P228
  • note ‘Cessation Return’ in the remarks box of the P228
  • pass the P228s, in P228 consecutive no order, with the P35 and P14s to the PAYE Employer Office
  • note the passed return on EBS function ‘RRR’.

Actions to take up to 6 April

To help PAYE Employer Office and NICO identify and plan the processing of paper returns, you should complete the following actions in the lead up to 6 April:

  • ensure all cessation returns that pass QS1 have been noted on EBS using function ‘RECORD RETURN RECEIPT’; this ensures that where returns are receipted at RSI1 a P228 for each P35 is sent to the office holding the return
  • check that ‘Cessation Return’ has been noted:

    • at the top of each P35
    • in the ‘Remarks’ box of the linked P228
  • send these to the Employer Office.