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HMRC internal manual

PAYE Manual

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HM Revenue & Customs
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Employer returns: employer return - quality checks: form P37 and / or cards P12 - 2005 onwards (Action Guide)

Note: This subject provides details of how to record receipt of employer returns for tax years from 2004-05 onwards.

To carry out the checks required prior to recording receipt of a form P37 and / or Cards P12 for years 2005 onwards, follow steps 1 - 20 below. The guide is presented as follows.

These checks must be made on the day the return is received.

  Step 1
   
  Steps 2 - 3
  Steps 4 - 5
  Step 6
  Steps 7 -13
  Steps 14 - 18
  Steps 19 - 20

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

Year of return

  1. Identify the year shown on the return
  • If the return is for the current tax year (CY) and today’s date is before 24 March of that tax year, send the return and enclosures to Debt Management Office
  • If the return is for the current tax year (CY) and today’s date is before 24 March of that tax year, send the return and enclosures to Debt Management Office
  • If the return is for the current tax year (CY) and today’s date is on or after 24 March go to step 2
  • If the return is for a year CY-1 or earlier
    • For returns for years up to 2003-04 follow ‘Form P37 and / or cards P12 - up to 2004 (Action Guide)’ at PAYE40022
    • For returns for years 2005 onwards - go to step 2

Initial checks

  1. Use Function VIEW EMPLOYER TRADE & SCHEME DETAILS to identify the scheme type
  • If this is DOME go to step 4, otherwise
  • Go to step 3
  1. Send back the whole return to the employer immediately and go to step 19

Further checks

  1. Review the return
  • If return is signed - go to step 5
  • If return is not signed - go to step 6
  1. If the return is signed
  • Review the cards P12 received during the year and attach any cards traced to the return - go to step 7, or
  • If no associated cards P12 cards are found - go to step 14

Unsigned form

  1. Use Function RECORD RETURN RECEIPT to generate a failure letter
  • Use Function AMEND EMPLOYER NOTES to record your actions and then file a copy letter in the employer record pad
  • Send the return back to the employer with the failure letter
  • Make an entry in the employer-related electronic file ‘Employers making mistakes on EOY Returns’

Cards P12

  1. Ensure you hold all the cards P12 for each employee
  • If more than one card P12 is held for any employee add the figures on each P12 to reach a total figure for each quarter
  1. Review the NIC table letters shown at the totals for the quarter
  • Where there is only one NIC table letter shown, add up the weekly or monthly figures for the quarter entered in each column
  • Otherwise, where there is more than one NIC table letter shown
    • Add up the weekly or monthly totals for each NIC table letter in columns 1a, 1b, 1c, 1d, and 1e, and
    • Add up the weekly or monthly figures in columns 2, 3, 4, 5 and 8
  1. Make an arithmetic check of each column. If the employer has not entered a total for each column add up the amounts and use green ink to enter these now
  • If the totals are correct go to step 12, otherwise
  • Strike through the incorrect figure using green ink and enter the correct total, and
  • Write to the employer to tell them where any error arose and what the revised figures are
  1. Use green ink to complete a form P14 for each employee for whom you hold a P12
  • Enter the total figures from the P12
    • If different NI contribution letters are shown on the card P12 show the different letters and corresponding amounts as separate items on the P14
  1. Separate the P14(s)
  1. Use the information held on the Pro-forma P14 to complete the back of the P37

Or manually calculate as below

  • Calculate the total employer’s and employee’s gross Class 1 NIC for each tax month for which there was a period of sickness
  • Multiply each figure by 13 per cent (rounding up any fractions of a penny)
  • Establish the Statutory Sick Pay (SPP) paid in each of those tax months
  • Compare the 13 per cent of Class 1 NIC with the SSP paid for each tax month
    • If the amount of SSP paid in any tax month is greater than 13 per cent of the Class 1 NIC, the difference between the two amounts in that month may be recovered, otherwise
    • No amount may be recovered in that month
  • Use the entries referring to Statutory Shared Parental Pay (ShPP) to calculate whether an entry is needed in the ‘ASPP Recovered’ box. You can use the ShPP Recovered Calculator (external users can find the guidance at https://www.gov.uk/shared-parental-leave-and-pay-employer
  • Use the entries referring to Ordinary Statutory Paternity Pay (OSPP) to calculate whether an entry is needed in the ‘OSPP Recovered’ box. You can use the OSPP Recovered Calculator (external users can find the guidance at http://www.hmrc.gov.uk/payerti/employee/statutory-pay/spp-calc.htm)
  • Use the entries referring to Statutory Maternity Pay (SMP) to calculate any Small Employers Relief (SER) (Word 31KB) and enter this in the ‘NIC Compensation on SMP’ box, then
  • Go to step 13
  1. Receipt of the return can now be recorded
  • Date stamp any return, not already stamped, with the date it was received, and
  • Record receipt of the return. Follow ‘Recording receipt of employer return (Action Guide)’ at PAYE41041

Note: From June 2006, employers who submit their return using online filing are able to print a form P60 for their employees. This facility will be available for all relevant years where the return was filed online.

Contacting the employer

  1. Contact the employer immediately by telephone to
  • Explain why the return is not acceptable
  • Obtain from the employer the missing or illegible information
  • Inform the employer that receipt of the return will not be recorded until any missing information is held
  1. Make a note of the call and keep this with your papers

  2. Put all the papers in a separate BF range to await a response from the employer

  3. On receipt of the response from the employer check that the items you now hold make a complete return. If so

  • Date stamp the return with the date it was received

Note: You must use the date the complete return was received as the date of receipt.
 
And

  • Record receipt of the return. Follow ‘Recording receipt of employer return (Action Guide)’ at PAYE41041
  1. On the BF date if a response has not been received from the employer review any post on hand to ensure that a reply is not held
  • If it is held check that the items you now hold make a complete return. If so
    • Date stamp the return with the date it was received

Note: You must use the date the complete return was received as the date of receipt

And

  • Record receipt of the return. Follow ‘Recording receipt of employer return (Action Guide)’ at PAYE41041
  • If a reply is not held pass the papers to the Debt Management Office with a report of the action taken asking them to pursue the missing or incorrect information

Send back the return

  1. Send back the whole return and any enclosures to the employer immediately and
  • Explain why the return is not acceptable
  • Ask the employer to submit a return in the correct format and / or provide missing information
  • Inform them that this return has not been recorded as a complete return and therefore penalties under S98A(2) TMA 1970 may accrue if an acceptable return is not submitted by the due date
  1. Use Function AMEND EMPLOYER NOTES to record your actions and then file the papers in the employer record pad. The note must show
  • The date the return was received
  • The reason it is not acceptable
  • The date it was returned to the employer