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HMRC internal manual

Debt Management and Banking Manual

From
HM Revenue & Customs
Updated
, see all updates

Debt and return pursuit: PAYE: cessation, cancellation and Cancelled One Year Only (COYO): Cancel One Year Only (COYO)

Where you establish that either:

  • there were no employees (or subcontractors)
  • there were no payments or benefits paid
  • any payments were below the Lower Earnings Limit (LEL)

but the scheme should remain open because there will be payments subject to Tax/NIC in the future, the scheme can be cancelled for one year.

A year can only be made COYO after the relevant tax year end. If you are notified in the current year then refer to DMSS5300.

Where, exceptionally, there is money on record you should establish what the payment was for and make the appropriate arrangements to reallocate to the correct year, scheme or Head of Duty (such as VAT, CT, etc) record. See DMBM522290.

You need to notify PAYE Employer Office that there have been no payments made to employees/subcontractors for the year (or were below the LEL) and to consider making the case COYO. You should take the following actions

PAYE (P) scheme only

Where a P scheme requires to be made COYO then:

  • change the status of the BROCS record for the year to be COYO to WWTD
  • issue form P212 to PAYE Employer Office to notify COYO and note the form that the record has been made WWTD
  • note BROCS that a P212 has been issued and the reason
  • note IDMS work item that a P212 has been issued and reason.

PAYE and CIS (PSC) scheme

If the PAYE element is to be COYO but the CIS element is to remain open then:

  • do not reduce the Estimated Monthly Yield (EMY) on BROCS to 0.00
  • do not make the case WWTD
  • follow normal pursuit procedures for the CIS returns and debt (DMBM524500) or

If the contractor advises of:

Issue form P212 to PAYE Employer Office to notify COYO for the PAYE element and that the scheme needs changing to Subcontractor only (XP) for the relevant year and:

  • note BROCS that a P212 has been issued and the reason
  • note IDMS work item that a P212 has been issued and reason

If the PAYE element is to be COYO and the CIS element has ceased then:

  • do not reduce the Estimated Monthly Yield (EMY) on BROCS to 0.00
  • do not make the case WWTD
  • follow normal pursuit procedures for any outstanding CIS returns and debt (DMBM524500)
  • follow the subcontractor only guidance at DMBM524370
  • issue form P212 to PAYE Employer Office to notify COYO for the PAYE and ceased for the CIS and note that the status of the scheme needs to be changed to (P) for the following year
  • note BROCS that a P212 has been issued and the reason
  • note IDMS work item that a P212 has been issued and reason.

The IDMS work item(s) will close the day after the status of BROCS has been changed to WWTD for the year concerned.

If there is a PAYE late-filing penalty work item for the year to be COYO, you should:

  • note IDMS Action History that scheme is to be cancelled one year only
  • apply a suitable BF date.

Customer Operations should discharge the penalties when actioning the P212 to COYO.

For an XP case, refer to DMBM524720.