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HMRC internal manual

PAYE Manual

From
HM Revenue & Customs
Updated
, see all updates

Employer records: maintain employer record: cancelled one year only (COYO) - up to 2007 (Action Guide)

To clear a year on an employer record cancelled one year only, follow steps 1 - 38 below. The Guide is presented as follows

Steps 1 - 7

Step 8

Step 9

Step 10

Steps 11 - 13

Steps 14 - 16

Step 17

Step 18

Steps 19 - 24

Steps 25 - 27

Step 28

Steps 29 - 37

Step 38

For details of how to access any of the Employer Business Service functions, use PAYE057.

Initial action

  1. Ensure that no return is appropriate
  • If you do not hold a return
    • Review the papers held
    • Consider whether a determination under Regulation 80 is appropriate

A check must be made to establish whether any payments have been allocated against the employer record for the year

  1. Use Function VIEW BROCS Format 3 (Postings Summary) to identify any payments made by the employer / contractor in the tax year relating to the return
  • If payments are shown on BROCS - make a note of the amounts and the dates of payment, - go to step 3
  • If there are no payments shown on BROCS - go to step 7
  1. Use Function VIEW BROCS Format 9 to check whether the Class 1A NIC signal is set
  • If the signal is set - go to step 7
  • If the signal is not set, telephone the employer / contractor immediately - go to step 4

Note: Where you are dealing with COYO between 6 and 30 April you must check BROCS for both CY-1 and CY-2. This is because CLIA signals are not updated on BROCS for CY-1 until mid to late April.

Nil Return

  1. If you have received a nil return
  • Ask the employer to explain why the amount was paid and not entered on the return, or
  • Ask the employer to explain why the amount was paid and they have told you that a return is not due
  1. Use the information supplied by the employer to decide whether the payment has been allocated correctly or not
  • If the payment has been allocated incorrectly
    • Arrange for BROCS to remove the payment from that year and to reallocate this correctly. For more information see subject ‘Overpayments and reallocations’ at PAYE47075 - go to step 7
  • If the payment has been allocated correctly
    • Advise the employer that they must submit a complete return
    • If you hold a return go to step 6, otherwise
    • Use Employer Notes to confirm that a return is due for the year and take no further action

Incomplete return

  1. Send the return back to the employer / contractor requesting a complete return. For more information see ‘Checks prior to recording receipt of a return’ at PAYE40016

  2. Use Function VIEW BROCS to check whether the following are held on the employer record

  • The CLASS 1A NIC EMP, and/or
  • The TC EMPLOYER signal, for years up to 2005-06 is set. Satisfy yourself that the year can be cancelled one year only
  • If any signals are held you must follow the instructions in the Action Guide ‘Nil returns - 2005 onwards’ at PAYE43031 to process a nil return
  • If neither of the signals are set go to step 8

XP scheme types

  1. For an XP scheme
  • Review the voucher record on CIS to ensure that the employer has not submitted any vouchers for that year
  • Check the entries on the ‘Contractor Scheme Voucher Pursuit Details’ screen
  • If any vouchers are displayed as ‘Captured’ the year cannot be COYO
    • Forward a copy of your findings to the relevant Debt Management Office for them to pursue the outstanding return, otherwise
    • Go to step 10

PSC schemes

  1. If you hold either return, with monetary amounts on them, this year cannot be COYO

If you hold a P35 with monetary amounts and you have

  • Confirmation that a CIS36 is not required
    • Use Function AMEND EMPLOYER TRADE AND SCHEME to update the scheme type to P as in PAYE27034
    • Review and update the scheme type for subsequent years
    • Process the P35

If you hold a CIS36 with monetary amounts and you have

  • Confirmation that a P35 is not required
    • Use Function AMEND EMPLOYER TRADE AND SCHEME to update the scheme type to XP as in PAYE27035
    • Review and update the scheme type for subsequent years
    • Process the CIS36

If you have evidence that both the P35 and CIS36 are not required, go to step 10

Updating the employer record

  1. Use Function CANCEL SCHEMES ONE YEAR ONLY or Function AMEND EMPLOYER INDICATORS to clear the year cancelled one year only (COYO)
  • If there are no exceptions you will have successfully cleared the year ‘cancelled one year only’
  • If the year is not live go to step 11
  • If the employer record has moved go to step 14
  • If the year has already been cleared go to step 17
  • If the employer record relates to a large employer go to step 18
  • If an error message relating to tax credits is displayed go to step 19
  • If an error message relating to incentive appeals is displayed go to step 25

EBS shows year not live

If any of the following apply you will be unable to clear a year cancelled one year only

  • The employer record is cancelled
  • The start date is later than the year on the return
  • The employer record is dormant
  • The employer record is ceased
  1. Review the papers and check that the correct year was entered

  2. If the correct year was not entered

  • Use Function CANCEL SCHEMES ONE YEAR ONLY or Function AMEND EMPLOYER INDICATORS again to update the employer record as cancelled one year only (COYO) against the correct year
  1. If the correct year was entered
  • No further action is required as the year is already cleared

Employer record has moved

This action must be taken when you have been unable to clear a year cancelled one year only because the employer record has moved. This could be where the employer record has been

  • Transferred
  • Merged, or
  • Succeeded
  1. Use Function AMEND or VIEW EMPLOYER SCHEME HISTORY to view the new employer reference

  2. If the new employer reference remains in your responsible Organisation Unit

  • Use Function CANCEL SCHEMES ONE YEAR ONLY or Function AMEND EMPLOYER INDICATORS again to record the year on the employer record as cancelled one year only (COYO), otherwise
  1. Send the correspondence to the new office immediately

Year already cleared

This action must be taken when you have attempted to clear a year cancelled one year only where

  • The cancelled one year only (COYO) indicator is already set
  • A return has already been received and a charge has been processed
  1. Review the papers and check that the correct year was entered
  • If an incorrect year was entered, use Function CANCEL SCHEMES ONE YEAR ONLY or Function AMEND EMPLOYER INDICATORS again to update the employer record as cancelled one year only (COYO) against the correct year
    • If the correct year was entered no further action is required as the year is already cleared

Large employer

This action must be taken if you have attempted to clear a year cancelled one year only and the employer record has more than 1,000 employments attached to it

  1. Review the papers held to establish if it was appropriate to attempt to cancel the year one year only
  • If this was not the correct action you must take alternative action to clear the year, for example obtaining a completed return or ceasing the employer record, otherwise
  • Select the [Confirm] button to initiate the computer check

Tax credits (for years up to 2006)

Take the following action if you are presented with either of the following error messages

  • ‘COYO indicator cannot be set. Tax credits paid in year’
  • ‘You cannot select COYO. Tax credits paid in year’

Note: These messages will be displayed for years up to and including 2005-06.

  1. Review the papers held to establish if it was appropriate to attempt to cancel the year one year only
  • If this was not the correct action you must take alternative action to clear the year, for example obtaining a completed return or ceasing the employer record, otherwise
  1. Use Function VIEW EMPLOYEES
  • Select ‘Linked Employees’

Where exceptionally, more than 10 employee records are displayed

  • Use EBS Function AMEND EMPLOYER SCHEME HISTORY to enter a cessation date of 31 March 2006 then - go to step 26

Note: Where the scheme type is PSC or XP you must enter a ‘Date Notified’, which is the date you received the information or select one of the following check boxes

  • ‘Date Not Known’ - where you do not know the date you received the information, or
  • ‘Date Not Applicable’ - where the update is being made from information not received from the employer, otherwise
  • Telephone the employer immediately. Note: Tax credit employment basis will only be linked to an employer record up to 5 April 2006
  1. Advise the employer that you are unable to cancel the year because tax credits have been attached for that year. Confirm for each employee identified whether the employer
  • Has paid tax credits to any employee identified during that year - go to step 22
  • Has paid tax credits under a different payroll - go to step 23
  • Does not know the employees - go to step 24
  1. Advise the employer to complete and submit form P35 and form(s) P14 for the year

  2. If the employees were paid under a different payroll

  • Use NTC Function Amend PVE Details to transfer the entire PVE award to the correct employer reference then go to step 26

If the employer does not know the employee(s)

  1. Use Form TC681 to notify the Employer Liaison Team (ELT) at the TCO that the applicant is not known to the employer then go to step 26

 

Incentive appeals

Take the following action if you are presented with the following error message

  • ‘There is an Open Incentive Appeal for the year’ go to step 25, or
  • ‘There is an Upheld Incentive Appeal for the year’ go to step 27
  1. B/F the papers for 14 days until the outcome of the incentive appeal is known
  • If the appeal is either withdrawn or denied go to step 26
  • If the appeal is upheld go to step 27
  1. Use either of the following functions to record that the employer record for that year is cancelled one year only (COYO)
  • Function CANCEL SCHEME ONE YEAR ONLY, or
  • Function AMEND EMPLOYER INDICATORS
  1. The record cannot be cancelled one year only

Filed online indicator set

  1. If you are presented with the following error message the record cannot be cancelled one year only
  • ‘A return has been Filed Online for the year’
  • No further action is required as the year has already been cleared

Final review

When a year has been cleared by setting ‘cancelled one year only’ or processing a nil return, it is essential that you ascertain the situation for the current year

  1. Use Function VIEW EMPLOYEES
  • Select ‘Linked Employees’
  • Where there are more than 10 employees - go to step 30
  1. For each employer record that has live employee records attached send an email to the relevant PAYE section’s eForm to advise them of the year for which you are setting the COYO indicator

  2. Use Function View EMPLOYER SCHEME HISTORY to check whether a Cessation Date is held

  • Where a Cessation Date is recorded, no further action required - Go to step 38, or
  • Check if any of the following are held on the employer record
    • Use Function VIEW BROCS, format 3 to check if any payments have been received for the current year
    • Use Function VIEW BROCS, format 9 to check whether the CLASS 1A NIC indicator is held, or
    • Use Function VIEW EMPLOYEES co check whether any of the live employees displayed have a Commencement Date later than 06/04/CY
  • If any of the above are held on the employer record, no further action is required - Go to step 38, otherwise
  • Go to step 32
  1. Contact the employer
  • If you contact the employer by telephone - go to step 33, or
  • If you unable contact the employer by telephone - go to step 34
  1. Where you contact the employer by telephone
  • If, for the current year, the employer makes any of the following - go to step 38
    • Making payments to directors / employees that are at or above the lower earnings limit
    • Making payments to any directors / employees who have another job / income
    • Providing expenses and / or benefits to directors / employees, or
  • If the employer is not making any of the above - go to step 37
  1. Where you are unable contact the employer by telephone
  1. When the employer returns the stencil your next action will depend on the answers provided
  • Where the employer confirms that the business has ceased
    • Use Function AMEND EMPLOYER SCHEME HISTORY to enter the actual cessation date if this falls within CY, or
    • 31 March CY-1 if the actual cessation date is prior to 31/03/CY-1

Note: Where the scheme type is PSC or XP you must enter a ‘Date Notified’, which is the date you received the information or select one of the following check boxes

  • ‘Date Not Known’ - where you do not know the date you received the information, or
  • ‘Date Not Applicable’ - where the update is being made from information not received from the employer

 

  • Where the employer confirms that no payments are being made or benefits / expenses provided

Note: Where the scheme type is PSC or XP you must enter a ‘Date Notified’, which is the date you received the information or select one of the following check boxes

  • ‘Date Not Known’ - where you do not know the date you received the information, or
  • ‘Date Not Applicable’ - where the update is being made from information not received from the employer

 

  • Where the employer confirms that payments are being made or benefits / expenses provided
    • Use Function AMEND EMPLOYER TRADE & SCHEME DETAILS to check that the scheme type held for CY is correct and update if necessary
  1. At BF date
  • If the employer has returned the stencil no further action is required, or
  • If the employer has not returned the stencil - go to step 37
  1. Use Function VIEW EMPLOYEES, - LIVE EMPLOYEES
  • Where there are live employees
    • Forward a request to the PAYE section to enter a cessation date of 31/03/CY-1
    • BF papers for 30 days to check that there are now no live employees
  • Where there are no live employees
    • Use Function AMEND EMPLOYER SCHEME HISTORY to enter 31/03/CY-1 as the cessation date

Note: Where the scheme type is PSC or XP you must enter a ‘Date Notified’, which is the date you received the information or select one of the following check

  • ‘Date Not Known’ - where you do not know the date you received the information boxes, or
  • ‘Date Not Applicable’ - where the update is being made from information not received from the employer
  • Use Function AMEND EMPLOYER INDICATORS to remove the POST indicator, and
  • Issue review letter 2 (Word 130KB) to the employer

Final action

  1. If the employer record has been cancelled one year only following receipt of a complete nil annual return, file away the return