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HMRC internal manual

PAYE Manual

From
HM Revenue & Customs
Updated
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Employer returns: employer return - quality checks: record failure (Action Guide)

References to CIS in this Action Guide applies to the old CIS scheme for to years up to April 2007, when ‘New CIS’ was introduced.

To record a failure, follow steps 1 - 9 below. The guide is presented as follows.

  Steps 1 - 2
   
  Steps 3 - 7
  Steps 8 - 9

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

Initial action

1. When a return fails to meet the quality standard checks and does not contain all the information needed to correct the return (for more information see subject ‘Correction of failed returns’ PAYE40035) it must be returned to the employer
   
  Note: Ensure that if any change of address is noted on the front of form P35 that the necessary action has been taken to amend the address on the employer record before you attempt to issue a failure letter.
2. If a quality standard failure occurs with the following returns go to step 8
  * Failure to complete P35 (for years up to 2004)
  * Failure to complete CIS36
  * Failure to complete P35MT (for years up to 2004)
  * Failure to complete P35 derivative (P35 = P524 / P525, P35EP + P524 / P525, and P35TAS + P440)
  * Failure to complete SC35 / SC11 (for years up to 1998-1999)
  * Failure to complete P37 / P12
  * Failure to complete P35PS and P14
  Otherwise
  * Go to step 3

Record failure reasons

3. Use Function RECORD RETURN RECEIPT to record failure reason(s), these details pass to the Tracking Tool in ERIC
   
  * Select the appropriate paragraphs giving the reason or reasons why the return has failed the quality standard checks
  Note: You cannot select ‘P14s have missing info - Pay column’, where you find this reason for failure you will need to select ‘P14s have missing info - National Insurance Boxes’ and use function EMPLOYER NOTES to make a note of the correct failure reason.
4. Use National Stock Letters on SEES in Microsoft Word to generate a failure letter
  * Select the appropriate reasons why the return has failed the quality standard checks
  Note: You cannot record a failure reason if both the correspondence and employer addresses are RLS. Follow the guidance in subject ‘RLS correspondence’ PAYE21220.
5. Link original letter with the original return
  * Send the letter and return back to the submitter using recorded delivery post
  Note: You must enclose a form P35, for the appropriate year, if the failure reason is either
  * Wrong version P35
  Or
  * Unapproved
6. Make an entry in the employer-related electronic file ‘Employers making mistakes on EOY Returns’ to show why the return was rejected
7. Consider whether you need to pass the papers to the officer with the ECS P35 Penalties user role to set the Temporary Inhibition signal. For more information see subject ‘Manually inhibiting penalties’ PAYE51030

Letters for other failures

8. Produce an appropriate letter using LFC to send back the return immediately to the employer / contractor using recorded delivery post
   
  * 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 use one of the following statements about penalties
  ### For dates up to 15 May
  ‘You will need to correct and send me the return by 19 May. If you do not then you may have to pay penalties.’
  ### For dates from 16 May
  ‘You will need to correct and send me the return. The longer the return is delayed the larger the penalty you may have to pay.’
9. Make an entry in the employer-related electronic file ‘Employers making mistakes on EOY Returns’ to show why the return was rejected