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HMRC internal manual

PAYE Manual

HM Revenue & Customs
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Employer returns: capture employer return - up to 2004: NIL returns - up to 2004 (Action Guide)

Note: This Action Guide should be used for tax years up to 2003-04 only.

To carry out checks on a NIL return follow steps 1 - 13 below. The Guide is presented as follows

Step 1

Step 2

Steps 3 - 6

Steps 7 - 8

Steps 9 - 10

Step 11

Step 12

Step 13

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

Initial action

  1. Review the items received
  • Go to step 2 if you have received a P35 with forms P14
  • Go to step 3 if you have received
    • A CIS36 / SC35 where there are no tax deduction details entered on the form
    • P35 only where there are no deduction details entered on the reverse of the form
    • P35 only where the deduction details on the reverse of the form show NIL
    • Confirmation from the employer by telephone or letter that no tax or NI deductions have been made or tax credits paid

Forms P35 with forms P14

  1. Review each P14. Are there any entries in the earnings column 1a
  • If not go to step 3
  • If so
    • Use Function VIEW EOY RETURNS HISTORY to check that the return has been recorded as received
    • Proceed to review the return for capture. Follow PAYE42031

Payment check

A check must be made to establish whether any payments have been allocated against the employer record for the year of the return or are likely to be made (Class 1A NIC charge)

  1. Use Function VIEW BROCS (Postings Summary) to identify any payments made by the employer / contractor in the tax year relating to the return
  • Where payments are shown on BROCS
    • Make a note of the amounts and the dates of payment, and then
    • Go to step 4
  • Where there are no payments on BROCS and there is no Class 1A NIC signal present
    • Make a note on the return ‘nil’ in green ink, and then
    • Go to step 9
  1. Where you have found that payments have been allocated to the year and the Class 1A NIC signal
  • Is set go to step 9 to continue your review
  • Is not set you must telephone the employer / contractor immediately
    • Go to step 5
  1. Ask them to explain why the amount was paid and not entered on the return

  2. Use the information to decide whether

  • The payment has been allocated incorrectly. If so arrange for BROCS to remove the payment from that year and to reallocate it correctly. Further information is available at PAYE47075. Then go to step 9, or
  • The payment was allocated correctly. If so the return must be considered to be incomplete, go to step 7

Incomplete returns

  1. Use Function AMEND / DELETE EOY RETURNS RECEIPT to delete the date of receipt. Further guidance is available at PAYE41011

  2. Send the return back to the employer / contractor requesting a complete return. Further guidance is given at PAYE40016

Tax credits

A check must be made to establish whether any Tax Credits have been authorised or funding payments made to the employer for the year of the return. For tax years up to 2002 these are in the TCS system and for years 2003 onwards they are in the NTC system.

Note: These checks do not apply when the employer record scheme type is XP.

  1. Use TCS or NTC Function VIEW PAYMENT VIA EMPLOYER DETAILS to identify
  • Funding issued
  • Tax credits, and then
  • Go to step 10 where any amount is identified


  • Go to step 11
  1. Make a note of any details shown and investigate the discrepancy. Follow PAYE53011

Capture return

  1. Use Function CAPTURE EOY RETURN DETAILS to capture the ‘nil’ return

Penalty review

  1. After a nil return is captured you must consider the penalty position. If the return was either recorded as received or captured
  • Before the Interim Penalty issue date (20th September) no further action is required, or
  • After the Interim Penalty issue date a penalty may have been issued. Send the following information to the Penalty Officer to consider discharging the penalty
    • Year of the nil return
    • Employer name
    • Employer reference number

Final review

  1. When a nil return has been processed it is essential that you consider the following
  • Making the employer record dormant, or
  • Ceasing the employer record - see EO SPD 1 and / or EO SPD 2 for further information