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HMRC internal manual

PAYE Manual

From
HM Revenue & Customs
Updated
, see all updates

Employer records: maintain employer record: cancellation of an employer record

This subject is presented as follows

 

Automated cancellation of an employer record

If an employer scheme is opened after 6 April 2013 and there has been no activity on the record within 120 days from the date the scheme was opened, then our IT systems will close down the record automatically. A form RTI206 will be issued automatically, advising that the scheme has been closed due to inactivity.

A record will be considered as having no activity where

  • No RTI submissions have been received (this includes nil and no payment for period submissions)
  • No payments have been made to HMRC
  • The employer is not an annual payer
  • There is no evidence that the employer want to claim CIS Deductions Suffered
  • The employer has not received an advance from HMRC
  • There are no periods of Construction Industry liability
  • There is no evidence that there has been any live employments attached to the scheme
  • There is no evidence that Class 1A NIC is due

Where none of these circumstances apply the employer record will be cancelled and a letter issued to the employer at their business address to advise them of the action HMRC have taken. These letters will only be issued once a month. Once the scheme has been cancelled the employer will not be able to submit any RTI submissions. If the employer requires the record to be reopened then they will need to contact HMRC to request this.

From the 6 March each year employers are able to make early RTI submissions relating to pay periods in the following tax year.

These returns are held in the RTI Service until 6 April when they are then processed through the HMRC systems as normal. In order to prevent any employer records being auto cancelled in error due to this suspension the auto cancellation process will be suppressed from the 27 February until 14 April each year. When the auto cancellation process recommences it is back-dated to include all those employers that would have been selected if the suppression had not taken place.

Manual cancellation of an employer record

An employer record may be cancelled only if it was set up in error, for example

  • There is a duplicate employer record elsewhere
  • The employer record was opened in error
  • No individuals were employed by the business

The employer record cannot be cancelled if any of the following apply

  • The employer has made a claim for CIS deductions suffered
  • Any linked employees are present under that employer reference
  • Certain indicators are held on the employer record. These will be highlighted by the computer when any action is taken to cancel an employer record
  • The employer record has been merged or succeeded or, prior to 6 April 2011, transferred
  • A skeleton employer record exists (these can not be generated from 6 April 2011)
  • If there is an RTI Joining Date on the record

An employer record must not be cancelled if the following are shown on the BROCS record for any year

  • Format 1 (Employer Data General Summary)

    • Archived sub-account
  • Format 3 (Postings Summary)

    • Payments
  • Format 9 (Designatory Data for ASN)

    • TC EMPLOYER
    • Dormant indicator
    • Return received and date

When you are satisfied a record should be cancelled, follow EO SPD 21 (PDF 35KB).

Permanent cessation

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Cancelled in error

Circumstances may arise where a cancellation date was entered incorrectly or was not appropriate.

In this event the cancellation date cannot be changed. The employer record must be reopened. Further advice is available at PAYE21205.

Linked employees

There may be occasions where you want to cancel an employer record but employees or tax credit applicants have been linked to that employer record in error. If this arises you will not be able to cancel the employer record.

You must

  • Enter a cessation date
  • If it is a non-RTI year use Function AMEND EMPLOYER INDICATORS to set the NOP35 and NOP35REM indicators for that year
  • BF the case until the end of the year

And at that point

  • Use Function AMEND EMPLOYER INDICATORS to set the COYO indicator for the year