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HMRC internal manual

PAYE Manual

From
HM Revenue & Customs
Updated
, see all updates

Employer returns: employer starter and leaver forms: employer e-file in-year penalties: in-year exceptions list

Whilst the issue of the vast majority of penalties is fully automatic and no office screening or intervention is required, there are circumstances where you must first take some other action.

Such cases requiring further action are automatically identified by ECS and included in the on screen E-File In-Year Exceptions List for review.

The list is updated daily and includes for review all cases where a penalty seems appropriate (as a paper starter or leaver form has been received) but ECS cannot automatically issue a penalty as one (or more) exceptions list criteria applies.

Exceptions List screen

This screen

  • Gives details of the employers ECS has been unable to automatically issue penalties to

And

  • Indicates why it was not possible to automatically issue the penalty

To access the screen

  • Select the [P35 Penalties] button within the Special Functions screen

The screen will default to show the penalty exceptions within your own office but, subject to having the correct access rights, you can alter the reference in the District field to view open appeals within another office.

The screen displays the following

Segment Appeal column

Where a letter ‘Y’ is present in the Segment Appeal column, ECS has been unable to automatically issue a penalty as there is an open appeal (on EBS) against the segmentation band / count allocated to the employer during the annual segmentation count.

Details of the appeal can be viewed in the Segmentation Details screen in ECS and the EBS Function VIEW EMPLOYER SEGMENTATION. EBS will inform ECS when the appeal is settled and if the result of the appeal is that the employer

  • Should have filed starter and leaver forms online, ECS will automatically issue a penalty and the case will be removed from the E-File In-Year Exceptions List
  • Should not have filed starter and leaver forms online, ECS will not issue a penalty and the case will be removed from the E-File In-Year Exceptions list

Temp Inhib column

Where a letter ‘Y’ is present in the Temp Inhib column, ECS has been unable to automatically issue a penalty as the E-File In-Year Temporary Inhibition signal is set for the tax quarter and year.

Where the signal is set and you want to issue a penalty you should

  • Cancel the signal using the E-File In-Year Penalties screen

And

  • Issue a penalty using the E-File In-Year Exceptions List screen

RLS column

Where a letter ‘Y’ is present in the RLS column (where undelivered mail is returned by the Post Office), ECS has been unable to automatically issue a penalty, as the last known address of the employer is RLS.

Where the signal is set you must

  • Ensure that the RLS signal is still valid and that appropriate tracing action is taken

If as a result of the tracing action taken

  • A new address is found (and the RLS signal is removed) ECS will charge appropriate penalties and no longer include the case on the exceptions list
  • The scheme is cancelled; ECS will no longer include the case on the exceptions list

If tracing action fails to obtain a new address, consider using the [Delete] button.

The employer’s record and file must be noted so that if a new address becomes available any penalty can be issued.

The list will show details of cases by year and tax quarter for all years.

You can only manually issue a penalty from this screen.

This list should be reviewed regularly (at least monthly) and action taken to issue a penalty where appropriate.

Trading name column

Where letter ‘Y’ is present in the Trading Name column ECS has been unable to automatically issue a penalty as the employer’s EBS record includes a trading name.

Note: Issue of penalty notices must be to a named person where the employer is not a limited company. Partnership names and trading names held on employer records must therefore have additional addressing information to ensure that they comply with legal requirements.

Where the Trading Name exception signal is set you can issue the penalty manually through ECS if you know the named person the penalty should go to. To do this

  • Select the appropriate entry in the exceptions list
  • Select the [Issue] button. You will be taken to the Issue Penalty screen for the relevant case
  • Complete the Name to be Addressed to field within the screen with details of the addressee
  • Select the [Issue] button

Buttons

[Issue] button

The [Issue] button takes you to the Issue Penalty screen (PAYE51007).

  • Complete the fields as appropriate in accordance with the guidance contained in this section

Note: You should only issue a Type 5 duty-geared penalty when Central Policy: Tax Administration Advice, Queens Dock, Liverpool (Employer Compliance) have authorised you to do so.

[No further action] button

Select the [No Further Action] button only when you wish to remove an employer from the End of Year Exceptions List without issuing a penalty

  • Select the required employer to highlight the entry

And then

  • Select the [No Further Action] button to remove the entry and set the ‘No further action’ signal in the Employer P35 Penalty History screen for the appropriate year (PAYE51005)

Notes: 

1. You will not be able to use the [No Further Action] button where the interim penalties list has been selected (use the [Remove] button instead).
   
2. Care should be exercised when setting the ‘No Further Action’ signal. This means that there will not be any further penalty action for the year involved. For example, no additional penalty will be sent to the employer if a supplementary return is submitted subsequently.

[Remove] button

Select the [Remove] button to remove an employer from the End of Year Exceptions List and therefore from consideration of a penalty

  • Select the required employer to highlight the entry

And then

  • Select the [Remove] button to remove the entry

Further penalty activity for the selected employer is not prevented for the year in question should any more incidents occur requiring penalty consideration. For example, removal of an interim penalty entry will not prevent issue of a final penalty when the return is received.

Notes: 

1. You will not be able to use the [Remove] button where the forms P35 ‘Over 1 year late’ list has been selected. (Use the [No Further Action] button instead).
   
2. Where you remove an employer from the late P35 return list and another return is received for the same year, a new entry will appear in the End of Year Exceptions List for that employer in respect of each new return received.
3. Where you remove an employer from the interim penalties list and the return remains outstanding at the date of the next interim penalty, the employer will re-appear for consideration of an interim penalty at that time.

[Up] button

The [Up] button will move you to the previous section of 20 entries in the End of Year Exceptions List or part specified.

If the button is not available this means that you are at the top of the list.

Note: This will move the entries within the whole of the list or just within the selected area if you have specified start and end employers’ reference numbers.

[Down] button

The [Down] button will move you to the next section of 20 entries in the End of Year Exceptions List or part specified.

If the button is not available this means that you are at the bottom of the list.

Note: This will move the entries within the whole of the list or just within the selected area if you have specified start and end employers’ reference numbers.

[Count] button

The [Count] button allows you to request a count of the number of entries in the End of Year Exceptions List.

Note: This will only count the entries for the whole of the list. You will not be able to count the entries where the penalties type ‘Over 1 year late’ list has been selected.

[Exit] button

The [Exit] button will return you to the Special Functions screen.