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HMRC internal manual

PAYE Manual

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HM Revenue & Customs
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Employer returns: employer return post capture: post capture checks

Note: Reference to CIS in this information applies to the old CIS scheme for years up to April 2007, when ‘New CIS’ was introduced.

Additional action may be required following the capture of the return where

  • The return included CIS deductions suffered
  • A Tax Credit Funding Discrepancy has arisen
  • A Tax Credits Paid Discrepancy has arisen

It is important that you always work all post capture checks and attempt to resolve all discrepancies at the same time.

Note: If an employer tells you that they have paid Working Tax Credit after 31 March 2006 and / or has carried forward Tax Credit Funding into 2006-07, you should advise the employer to contact the Employer Helpline on 0300 200 3200 (text phone 0300 200 3212).

CIS Deductions Suffered

From 6 April 2002, limited companies who have deductions made from their income as subcontractors are able to set-off these deductions against the monthly or quarterly PAYE / NICs and any CIS liabilities due from their employees and / or subcontractors.

The amount set-off is returned by the completion of the ‘CIS deductions suffered’ box on the employer annual return (Form P35) and will result in an entry on the following EBS work lists

  • ‘CIS Deductions Advisory’ - for 2002-03 and earlier captured returns
  • ‘Post Capture’ - for 2003-04 and later captured returns

CIS deductions suffered must only be reviewed when you are investigating an overpayment.

More information and instruction can be found in ‘CIS deductions advisory and post capture’ at PAYE53010 and the corresponding Action Guide at PAYE53011.

Tax Credit Funding Discrepancy

A Tax Credit Funding discrepancy arises when the amount of tax credit funding shown on the P35 is more or less than the amount on the Tax Credit Service (TCS) or New Tax Credit system (NTC).

All tax funding discrepancies must be dealt with immediately.

When a discrepancy arises for years up to 2002-03

  • A message will be presented giving you details of the discrepancy
  • The Tax Funding Discrepancy indicator will be automatically set on the employer record

And

  • An entry will appear on the monthly list from the processing centre headed ‘All other cases referred to Districts’ where the Funding Discrepancy indicator is still held on the employer record

When a discrepancy arises for years 2003-04 to 2005-06 a work item will be produced on the Post Capture work list.

From April 2006 a change was made to legislation so that the method of payment of all tax credits would be direct to the taxpayer.

More information and instruction can be found in ‘Tax credit funding discrepancy - up to 2003’ at PAYE46095 and the corresponding Action Guide at PAYE46096.

Tax Credits Paid

A Tax Credit Paid discrepancy arises when the amount of tax credit paid shown on the P35 is more or less than the amount on the New Tax Credit system (NTC).

When a discrepancy arises, within specific parameters, for years 2003-04 to 2005-06 a work item will be produced on the Post Capture work list.

From April 2006 a change was made to legislation so that the method of payment of all tax credits would be direct to the taxpayer.

More information can be found in ‘Tax credits’ at PAYE46100.