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HMRC internal manual

PAYE Manual

Employer records: maintain employer record: cancelled one year only (COYO)

This subject is presented as follows

When to COYO
How to COYO
PSC Schemes
COYO in error

When to COYO

You may need to clear a year on an employer record cancelled one year only (COYO) where all of the following circumstances apply

  • No payments of earnings equivalent to or above the Lower Earnings Level were made to employees
  • There are no indications that the employer is liable to pay Class 1A NIC charges
  • No tax credits have been authorised or funding payments made to the employer for years up to and including 2005-06
  • No tax credit funding payments have been made to the employer for years up to and including 2005-06 (NTC)
  • There is no evidence of payments being made to a subcontractor with or without tax deductions being made from these payments
  • No Regulation 80 determination is being considered

You will not be able to COYO if the employer record has already been ceased for that year. In these circumstances a nil P35 should be captured.

How to COYO

If you have decided that a year should be cancelled one year only the employer record can be updated by setting the year-related indicator ‘COYO’. This can be done in one of two ways. Either by using




Both methods will update the Employer Business Service (EBS) employer record in the same way and send the information to ECS.

Which function to use

The normal rule of thumb in deciding which function you should use is

  • Use Function AMEND EMPLOYER INDICATORS if you want to update one employer record


  • Use Function CANCEL SCHEMES ONE YEAR ONLY if you want to update multiple employer records


An employer record cannot be cancelled one year only if any of the following apply

  • An open incentive appeal is held for the year

Note: Incentive appeal is the term used to describe an appeal received from an employer against either

* The non-award of an incentive payment


* The withdrawal of an incentive payment

Only employers who had less than 50 employees and used online filing were eligible for incentive payments (from 2004-05 for a five year period).

  • An upheld incentive appeal is held for the year
  • Any return has already been captured on the employer record for that year (this includes nil returns and multiple returns where the overall position for the year is nil)
  • The employer reference cannot be found
  • There is no Accounts Office reference held on the EBS record
  • The employer record was ceased or cancelled in a previous year
  • The start date is later than CY-1
  • The employer record was transferred out, merged, or succeeded in a previous year
  • The year has already been cleared ‘Cancelled one year only’
  • The dormant indicator is held on the employer record for that year
  • New tax credits had been authorised to be paid by the employer during that year (for years up to and including 2005-06)
  • The Filed Online indicator is set for the year
  • Payments have been made to a subcontractor (for 2008 onwards)

You must not cancel the employer record one year only

  • if a return is due, this must be recorded as received and captured in the normal way
  • if a return is not due a proforma nil return must be processed

A return must be recorded as received and captured as instructed in PAYE43031.

PSC Schemes

For years to 2007

You must only COYO an employer record with a PSC scheme type where you are satisfied that both returns, forms P35 and SC35 / CIS36, are not due for that year.

Where only one of the returns is accepted as not being due, follow Action Guides PAYE27034 and PAYE27035 to consider changing the scheme type.

You must 

  • Record the date of receipt of the return due using Function RECORD RETURN RECEIPT
  • Capture the appropriate return using Function CAPTURE EOY RETURN DETAILS

For year 2008 onwards

Where you have established that the P35 return is not due, follow PAYE27035 to change the scheme type to XP.

COYO in error

Where you discover the COYO indicator has been set in error then the employer record must be reopened. For more information see subject ‘Re-opening years cancelled one year only’ at PAYE21210.

Note: An employer record can only be reopened in the same or the following year the record was originally cancelled.


When a year has been cancelled one year only it is important that the employer record is reviewed to ascertain whether it is appropriate to cease or cancel the employer record. This will ensure that only live employer records are held where a return is expected and due.