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HMRC internal manual

PAYE Manual

From
HM Revenue & Customs
Updated
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Employer returns: employer return post capture: captured returns - exceptions - up to 2004 (Action Guide)

Note: This section provides details of how to handle capture returns - exceptions for tax years up to 2003-04.

To deal with discrepancies on captured returns, follow steps 1 - 24 below. The Guide is presented as follows

Steps 1 - 2

Steps 3 - 8

Step 9

Steps 10 - 11

Steps 12 - 13

Steps 14 - 18

Step 19

Step 20

Steps 21 - 24

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

Initial action

  1. In all cases you must
  • Obtain the employer related electronic file ‘NIC Discrepancies’
  • Allocate the next consecutive number and list the case in the employer related electronic file
  • Keep copies of all correspondence or notes of telephone calls and actions taken. File these in consecutive number order in the employer related electronic file
  1. Before commencing your review ensure that you have all available information to hand
  • The memo from NICO and forms P14
  • Any relevant post
  • The original return for the scheme together with any machine lists

Choosing your action

If NICO disagree the figure of NIC they will advise you of the correct total according to the P14s submitted to them. You must compare NICO’s figure with the forms held. An obvious error may be apparent (such as multiple returns captured to the same record). Your next action depends upon the type of discrepancy

  • If the return has been captured to an incorrect record go to step 3
  • If more than one form P228 has been issued for the same employer go to step 10
  • If NICO disagree with a total for a machine listed scheme go to step 11
  • If you have a non-machine listed scheme (other than in the circumstances outlined above) go to step 13

Return captured to incorrect record

  1. Use Function VIEW EOY RETURNS HISTORY to check the employer record on which the P228 charge has been incorrectly entered
  • If this shows that a return has been received for the year check if you hold a return
  • If you do hold a return you may need to correct the return, or key-in corrected figures. Follow the guidance in this Action Guide
  • From step 11 if the scheme has been machine listed
  • From step 13 for non-machined schemes

Otherwise, if you do not hold a return you will have to take corrective action

  • Follow ‘Changes to return receipt details post capture (Action Guide)’ at PAYE46016 to remove the incorrect details from the record
  • Then go to step 5
  1. Banking Operations will have dealt with any false overpayment arising from the original error in one of the following ways
  • The issue of an overpayment notification to the Processing Office or, exceptionally, to the Debt Management Office
  • Automatic reallocation of any small overpayment to the current year and the issue of a letter to the employer saying this has been done
  • Automatic posting of any small overpayment to the Overpayment Account as a Permanent Overpayment
  1. If the return has not been received use Function AMEND EMPLOYER INDICATORS to set the Post indicator on the employer record and put the papers in the working file until the return is forwarded to you by the employer

  2. After the return has been received and the correct P228 charge details have been captured, use Function VIEW BROCS Format 3 ‘Postings Summary’ to check the P228 charge details for the year under review

  3. If the amounts shown on ‘Postings Summary’ agree with the amounts paid or there is an underpayment

  • Use Function AMEND EMPLOYER NOTES to record your actions and then file the papers in the employer record pad
  • Use function AMEND EMPLOYER INDICATORS to remove the Post indicator from the employer record
  • Any underpayment will be dealt with by the Debt Management Office
  1. If there is an overpayment and you already hold an overpayment notification for the year in question
  • Calculate and note the revised overpayment
  • Dispose of the overpayment by following the instructions in ‘Overpayment notification (Action Guide)’ at PAYE47061 , otherwise
  • Put the papers on BF and deal with the notification as above on receipt

More than one form P228 issued for the same employer

  1. Use Function VIEW EOY RETURNS HISTORY to check that the P228 charge information agrees with the information NICO has given

If more than one list number and consecutive number are shown for the year, multiple returns have been captured. These may include an additional or a correction to the original return

  • Use function VIEW EOY RETURNS HISTORY to review the number of returns that have been recorded as received for the employer reference for the year under review
  • Compare the P228 charge details with the figures supplied by the employer on the return
  • If there is a discrepancy prepare a ‘correction’ return for the adjustment required - go to step 22
  • Finally, on the next working day, when the record has been updated, if a return was incorrectly recorded as received on the employer record, use Function AMEND / DELETE EOY RETURNS RECEIPT to delete the date of receipt. Use Function AMEND EMPLOYER NOTES to record your actions and then file the papers in the employer record pad

Machine listed schemes

Where a scheme has been machine listed the entry ‘Machined’ is stamped on the return at the top of the front page

  1. If NICO disagree with the total for SMP, NIC Holiday (for years up to 2005-06), NIC Rebate or gross NIC consider whether the total shown on the return agrees with the total on the machine list
  • If it does not agree with the total on the machine list go to step 20
  • If it does agree, and the total shown on the return agrees with the total reported to NICO by the Processing Office, attach the machine list to the return and forward your reply to NICO to compare the details with their figures
  • If the total on the return disagrees the total reported by the Processing Office go to step 22
  1. If NICO disagree with the amount of NIC compensation on SMP
  • If the amount of NIC compensation on SMP shown on the return agrees with the amount given by NICO
    • Go to step 22
    • Prepare your reply and forward it to NICO
  • If the amounts disagree
    • Go to step 20
    • Prepare your reply and forward it to NICO

Non-machined schemes

  1. If you have previously sent the return to NICO to compare with their computation go to step 15

If you have not previously sent the return to NICO check each total in question

  • If the total shown on the return disagrees the total reported to NICO you must correct the P228 charge details
    • Follow steps 22 - 25
    • Prepare your reply and forward it to NICO, or
    • If the amount shown on the ‘Correction’ P228 set differs from the amount of the discrepancy reported by NICO, go on to step 14
  1. Prepare your reply and forward it with the return to NICO
  • NICO will compare the figures with their computation and return the forms with their explanation of any discrepancies
  • Go to step 15 on receipt of their reply

Discrepancies identified by NICO

  1. If NICO have identified an amount shown on the return for which they have not received a form P14
  • If the copy of form P14 has been received
    • Prepare a pro forma form P14
    • Copy onto it the details shown on the original copy
    • Scrap the P60 part of the pro forma P14
    • Forward the copy with your reply
  1. If the copy of form P14 has not been received
  • Ask the employer to provide the details
    • Advise the PAYE Section of your action
  • On receipt of the employer’s reply prepare a pro forma form P14 if you can now resolve the query
    • Scrap the P60 part of the pro forma P14
    • Forward the copy with your reply
    • Pass the pro forma copy to the PAYE Section with an explanatory memo
  • If the employer’s reply does not settle the discrepancy make further enquiries to establish
    • If a further / revised form P14(s) is required
    • If a revised return is required
  1. If NICO have identified a discrepancy between an entry on the return and the amount shown on the relative form P14
  • Contact the employer to clarify the discrepancy and request the correct figures
  • Compare the revised figures with those on the return
  • If the return is correct
    • Prepare a reply for NICO
    • Give the name of the employee and full details provided by the employer
  • If the return is incorrect
    • Go to step 20 to make the amendments, and
    • Go to step 22 and correct the P228 charge
  1. If NICO have identified an error in adding up SMP, NIC Holiday (for years up to 2005-06), NIC Rebate or gross NIC on the return, they will have told you the total obtained from all forms P14 for the scheme
  • Go to step 20 to correct the return
  • Go to step 22 to correct the P228 charge
  1. If NICO disagree only with a NIC compensation figure check
  • Does the amount of NIC compensation on SMP shown on form(s) P35 agree with the NICO amount
    • Yes - The wrong amount was reported on form P229. Follow the instructions at step 22 and forward your reply to NICO
    • No - Follow the instructions at steps 20 and 22. Then prepare your reply and forward it to NICO

Correcting the return

  1. Do not amend figures or totals on the existing return. Instead
  • Prepare a pro forma additional return
  • Make all the corrections needed on this pro forma form
  • Always use a copy of the latest print of the form
  • Only enter the amount of adjustment required to correct the entry on the existing form(s)
  • Write in green ink, with one exception. Write minus figures in red ink and enter ‘M’ in front
  • Carry the net corrections forward as necessary
  • Cross through the Questions and Declaration
  • Write ‘Pro forma additional’ at the top
  • Enter the
    • Accounts Office reference
    • Office number and employer reference under the Accounts Office reference
    • Employer’s name in the address box

Pro forma additional P14

  1. Whenever you prepare a pro forma form P14 always
  • Write in green ink
  • Write ‘Pro forma additional’ at the top
  • Enter the
    • Employee’s name and National Insurance Number (NINO)
    • Processing Office name, office number and employer reference
    • Tax year
    • Employer’s name
  • Only enter the amount of increase or decrease
  • Put ‘M’ in front of any figure of decrease, unless the total shown on the earlier form P14 was an amount of net tax refunded (in which circumstance a ‘decreased figure’ would represent an increase in tax deducted)
  • Scrap part P60 after making all entries
  • Scrap the copy if the employer submits single copy pensioner returns

Correcting P228 charge details

You may have to correct P228 charge details in the following circumstances

  • A ‘correction’ return is required because a figure has been captured on the return incorrectly
  • An ‘additional pro forma’ or ‘correction’ return is required because you entered an incorrect machine list total on the original return
  • An ‘additional pro forma’ or ‘correction’ return is required because the employer or contractor copied the wrong figure onto the original return or added up the figures incorrectly
  • A ‘correction’ return is required because the employer omitted or entered the wrong amount of NIC compensation on SMP
  1. You must calculate the adjustment(s) required to correct the P228 totals for the year, then use Function CAPTURE EOY RETURN DETAILS to update the employer record for the year as necessary
  • Select the appropriate return class
  • Enter in the monetary fields the amount that is required to correct the original entry to result in the correct net overall position. This may include negative amounts
  1. You can call up the ‘P228 Remarks’ box at any point during 1st or 2nd keying
  • If NICO reported the error, enter in the REMARKS field the NICO reference
    • DRF followed by up to five numbers
    • RSSN followed by up to six numbers
  • You may add up to three remarks for any return
  1. If the adjustment has increased the overall liability use Function VIEW BROCS Format 3 ‘Postings Summary’ to check payments already made

  2. If the amount due has not been paid

  • Send a report to Banking Operations explaining how the liability has arisen
  • Advise the employer (by telephone if possible)