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HMRC internal manual

PAYE Manual

From
HM Revenue & Customs
Updated
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Employer returns: capture employer return - 2005 onwards: nil returns - 2005 onwards (Action Guide)

Notes:

  1. This Action Guide should be used for tax years from 2004-05.

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

To carry out checks on a NIL return follow steps 1 - 17 below. The Guide is presented as follows

Step 1

Step 2

Steps 3 - 6

Step 7

Steps 8 - 9

Steps 10 - 11

Steps 12 - 15

Steps 16 - 17

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

Recording receipt

  1. Review the items that you have received ensuring that you have applied the QS1 checks and followed the procedures in the Action Guide ‘Cancelled one year only (COYO)’ PAYE21020
  • If you have received form P35 with forms P14 - go to step 2
  • If you have received a CIS36 where there are no tax deduction details entered on the form for years 2005 to 2007 - go to step 3
  • If you have received P35 without forms P14 - go to step 12
  • If you have received confirmation that a P35 is not due - go to step 12

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 the Action Guide ‘Checks prior to recording receipt of a return’ at PAYE40016

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 10
  1. Where you have found that payments have been allocated to the year and the Class 1A NIC signal
  • Is set go to step 10 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 this correctly. For more information see subject ‘Overpayments and reallocations’ 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. Send the return back to the employer / contractor requesting a complete return. For more information see the Action Guide ‘Checks prior to recording receipt of a return’ at PAYE40016

Tax credits for years up to 2005-06

Unless the scheme type is XP 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

  1. Use
  • NTC Function VIEW ACCOUNT to identify funding issued
  • NTC Function VIEW PVE DETAILS to identify tax credits paid

Where any amount is identified

  • Go to step 10

Otherwise

  • Go to step 12
  1. Make a note of any details shown and investigate the discrepancy. Follow the Action Guide ‘CIS deductions advisory and post capture - up to 2006-07’ at PAYE53011

Returns with forms P14

  1. Use Function RECORD RETURN RECEIPT to record the return

When capturing a Nil return

  • Record a return that has passed the quality check
  • Use Submission Type ‘Complete Return’
  • Record the number of forms P14
  1. Use Function CAPTURE EOY RETURN DETAILS to capture the return

When capturing the Nil return

  • Use Return Class - Original Complete
  • Leave the P35 Questions (Word 30KB) at their default settings
  • Answer the P11D Not Due question as ‘Y’
  • Leave all monetary amounts at 0.00
  • Go to step 16

Returns without forms P14

  1. Use Function Record Return Receipt to record receipt of the return
  • Note that return has passed the paper quality checks
  • Use submission type - Complete Return
  • Record the number of forms P14 as ‘0’
  • Set the RSI indicator to RSI2
  1. Does the P35 have any monetary values on the return?
  • If the P35 does not have monetary values on the return - go to step 14, or
  • If the P35 has monetary values, for example CIS Deductions suffered, NIC compensation - go to step 15

Where the P35 return does not have any monetary values

  1. Use Function CAPTURE EOY RETURN DETAILS to capture the return using the following
  • Use Return Class - Original Complete
  • Leave the P35 questions at the default settings
  • Answer the ‘P11D Not Due Questions’ as Y if P11Ds are not expected and N if P11Ds are expected
  • Leave all monetary values as 0.00
  • Go to step 16

Where the P35 return has any monetary values

  1. Use Function CAPTURE EOY RETURN DETAILS to capture the return using the following
  • Use Return Class - Original Complete
  • Leave the P35 questions at the default settings
  • Answer the ‘P11D Not Due Questions’ as Y if P11Ds are not expected and N if P11Ds are expected
  • Capture the monetary values on the return
  • Go to step 16

Penalty review

  1. After a Nil return is captured you must consider the penalty position. Your next action will depend on the type of nil return you process
  • If the return is a Nil P35 with P14s then no further action is required
  • If the return is a Nil P35 without P14s and monetary values other than CIS Deductions Suffered no further action is required
  • If the return is a Nil P35 without P14s and no monetary values go to step 17
  • If the return is a Nil P35 without P14s and a monetary value for CIS Deductions suffered go to step 17
  • If the return is a Nil CIS36 go to step 17
  1. Where the original return was received before 19 May, forward the following details to the penalty officer
  • Employer name
  • Employer reference number
  • Year of the return
  • Request the temporary inhibition of the online P35 penalty for failing to file the specific year online
  • Ask for a note to be made on ECS ‘NIL return received on –/–/-—‘

Where the original return was received after 19 May, forward the following details to the penalty officer

  • Employer name
  • Employer reference number
  • Year of the return
  • Request the inhibition of the P35 penalty
  • Request the temporary inhibition of the online P35 penalty for failing to file the specific year online
  • Ask for a note to be made on ECS ‘NIL return received on –/–/-—‘, and
  • Discharge of any penalties already issued

Notes:

a. When RSI2 is set when recording receipt of a Nil return, a copy of the return will not be shown on e-Filestore.

b. Where you have a P35 return captured on EBS for tax years 2013-14 onwards you will be required to manually capture the charge in ETMP. To do this, follow the guidance at PAYE43210.