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HMRC internal manual

PAYE Manual

Employer returns: employer return post capture: form P38 review

This subject is presented as follows


Forms P38 and P38A ask employers to report payments that they have made to employees without applying PAYE. There may be a number of reasons why these forms are completed. For example, because of the nature of the business, the employer

  • Employs part-time, casual staff, or
  • Has staff working on short term contracts

Payments not included on P14

The following shows the type of payments that an employer should include or omit on forms P38 or P38A

Section A of P38 or P38A

Include payments above the PAYE threshold and to new employees who have not a produced a P45 and were engaged for more than one week, if the rate of pay was above £1 a week or £4 per month, and they failed to complete certificate A or B on form P46. Omit those payments included on P14.

Section B of P38 or P38A

Include payments to any employee including casuals which total over £100.  Omit those payments included on forms P14; in Section A of P38 or P38A; to employees for whom the employer holds a form P46 with Certificate A or B completed and those payments returned on forms P38(S)

Form P38A

Forms P38A are sent to all employers automatically with the return. One of the questions (Question 1) on the P35 / P35MT return asks

  • Whether the employer has enclosed for every person in their paid employment during the year, including those who had left

    • An End of Year Summary, form P14, or
    • The declaration completed by students employed by them during school holidays, form P38(S)

Where the employer has submitted forms P14s or P38(S) forms for all employees

  • They must tick ‘YES’

If the employer had employees for whom they have not completed a form P14 or P38S

  • They must tick ‘NO’, and
  • Must give details on a form P38A for each individual

Where the employer does not return any forms P38A and either does not complete question 1 or ticks ‘No’, then you will need to make an entry on the P38 list. ‘Form P38 list review (Action Guide)’ at PAYE46042 gives further guidance.

Form P38

This is the manual version of the form and is sent to all employers included on the P38 list who have not returned forms P38A.

Additionally this form may also be used to obtain returns from an employer where

  • You have been advised that an employer has made no payment but you have reason to believe that there may be repeated use of casual or part time help

An Employer Compliance Unit will normally issue form P38 for this type of case.

Form P38 list review

You will need to make an entry on the P38 list where an employer has either

  • Not completed Question 1 on the return, or
  • Has ticked ‘No’ to Question 1 but has not submitted forms P38

This list must be reviewed continually to see whether the employer has subsequently submitted forms P38 or whether the case should be referred to the appropriate PAYE section to review. ‘Form P38 list review (Action Guide)’ at PAYE46042 gives further guidance.

Bulk reviews by Employer Compliance Unit

Toward the end of April each year the Compliance Manager may contact the Employer section Manager or Compliance Liaison Officer in your office to request that a number of forms P38 / P38A be stockpiled.

They will normally request the selection criteria for the forms P38 / P38A they are looking to be stockpiled until the end of July. This will be based on a certain level of income decided by each Compliance Manager that will usually exceed the de minimus limit for recovery. There may additionally be other factors that the Compliance Manager asks you to look out for when considering which forms to stockpile. For example, a particular type of employer.

At the end of July, either the Compliance Manager or a member of the compliance team will perform a review of the cases stockpiled for potential compliance review. This may involve visiting your office or alternatively they may request the forms are passed on to them to review.