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HMRC internal manual

Debt Management and Banking Manual

Debt and return pursuit: CIS: contractor's response: contractor advises of cessation

In-year PAYE/subcontractor scheme

If you are advised that a contractor has ceased, ask if this also applies to the PAYE element of the scheme.

Both PAYE and subcontractor element ceased

If the scheme has ceased for both PAYE and CIS the procedures for the PAYE element remain unchanged:

  • ask the contractor to make all payments (both PAYE and CIS deductions) including any penalties up to the date of cessation and submit any outstanding P35 or FPSs/EPSs
  • request that all CIS monthly returns to the date of cessation are sent in.

When you are calculating the total tax and NIC outstanding you need to take the figures from the P35/FPSs and add these to details from the individual CIS monthly return figures.

CIS will be updated with details of the cessation and continue the normal course of action for pursuing any outstanding returns and penalties up to the date of cessation.

If there are CIS penalties raised for the period endings after the date of cessation:

  • use the ‘Maintain Penalty Inhibition’ function on the CIS system (available to Officer level and above using the CISR Pursuit Manager role)
  • issue an eForm to the Employer Office using Destination Office ‘NICEO Contractor Maintenance’ and referral reason ‘CIS – Penalty Vacating’ requesting discharge of penalty
  • note ETMP and IDMS of your action and change the next action to ‘A/W Clearance’ with a 28-day BF.

To update a specific return period as exempt from filing a return because the return was not due, use the ‘Maintain Return Period Exemption’ function on the CIS system; see the instructions at DMBM524555.

Subcontractor part ceased

If only the SC part of the scheme has ceased:

  • notify PT Ops of the scheme change (do not cease the scheme) by sending an eForm to ‘NICEO PAYEMP Cessations-Setups-Restarts-Nil Returns’
  • ask that the scheme be amended to a P scheme for the following tax year.

To update a specific return period as exempt from filing a return because the return was not due, use the ‘Maintain Return Period Exemption’ function on the CIS system; see the instructions at DMBM524555.

Normal course of action to pursue any outstanding returns and penalties up to the date of the cessation will continue.

If there are CIS penalties raised for the period endings after the date of cessation:

  • use the ‘Maintain Penalty Inhibition’ function on the CIS system (available to Officer level and above using the CISR Pursuit Manager role)
  • issue an eForm to the Employer Office using Destination Office ‘NICEO Contractor Maintenance’ and referral reason ‘CIS – Penalty Vacating’ requesting discharge of penalty
  • note ETMP and IDMS of your action and change the next action to ‘A/W Clearance’ with a 28-day BF.

In-year subcontractor case only

If the contractor advises you that his scheme has ceased, send an eForm to ‘NICEO PAYEMP Cessations-Setups-Restarts-Nil Returns’.

New CIS will be updated with details of the cessation and continue its normal course of action for pursuing any outstanding returns and penalties up to the date of the cessation.

If there are CIS penalties raised for the period endings after the date of cessation then:

  • use the ‘Maintain Penalty Inhibition’ function on the CIS system (available to Officer level and above using the CISR Pursuit Manager role)
  • issue an eForm to the Employer Office using Destination Office ‘NICEO Contractor Maintenance’ and referral reason ‘CIS – Penalty Vacating’ requesting discharge of penalty
  • note ETMP and IDMS of your action and change the next action to ‘A/W Clearance’ with a 28-day BF.

Delays in setting the Cessation signal

If your experience tells you there will be delays in processing the cessation advise the contractor to either:

  • ring the CIS helpline to register the period of inactivity
  • complete box 8 on the next return (box 8 is a declaration stating that the contractor does not anticipate paying contractors for the next six months).

We can not register this period of inactivity ourselves it must be done by the contractor using one of the methods above.

One point to note is that if the contractor completes box 8 on the return the inactivity signal will be set for six months at a time only. If the contractor rings the CIS Helpline the period of inactivity could be extended to the end of the tax year. Useful information is contained in CISR67010.