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HMRC internal manual

PAYE Manual

From
HM Revenue & Customs
Updated
, see all updates

Employer returns: employer EOY penalties: issuing an employer penalty screen

Employer Section

Multiple

If the automatic issue of a penalty notice has not been possible because the employer submitted more than one P35 / CIS36 return for the year, a tick will be shown in the Multiple box.

P35 / CIS36 return details need to be matched to the received date so that the correct information can be used to calculate the penalty in this case.

Trading Name

Where a tick is present in the Trading Name box ECS has been unable to automatically issue a P35 / CIS36 End of Year penalty as the employer’s EBS record includes a trading name.

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

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

  • Enter the addressee details in the Name to be Addressed to field

And

  • Select the [Issue] button

Appeal

If automatic issue of a penalty has not been possible because there is an outstanding appeal against a penalty notice issued to the employer for a selected year, a tick will be shown in the Appeal box.

RLS

The RLS check box indicates (where undelivered mail is returned by the Post Office), that the last known address for the employer is RLS.

Inhibition

If the employer has been excluded from consideration of end of year penalties, a tick will be shown in the Inhibition box.

Name to be Addressed To

The Name to be Addressed to field allows you to enter a name to be included in the addressing information on the penalty notice.

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

P35 or CIS36 Penalty

If the End of Year return is a P35

  • Enter P

If the End of Year return is form CIS36

  • Enter C

For Tax Years before 2000 ‘S’ should be entered where the return was on form SC35.

Note: If you incorrectly enter ‘S’ for 1999-2000 onwards the system will automatically correct your entry to ‘C’ and vice versa.

Type

The ‘Type’ drop-down list contains the numbers 1 to 5 for the Penalty Types available. On entry into the Issue Penalty screen, there is nothing in the drop-down list. When a type is selected, the corresponding description will be displayed alongside. The descriptions for the Penalty Types are

Type 1 - PRE INTERIM FINAL (PAYE51025)

Type 2 - FIRST INTERIM (PAYE51025)

Type 3 - SUBSEQUENT INTERIM (PAYE51025)

Type 4 - POST INTERIM FINAL (PAYE51025)

Type 5 - OVER ONE YEAR LATE - TAX GEARED (PAYE51050)

When a Type 5 is selected, there will be some confirmation to ensure that the return is more than one year late (that is, greater than ‘exactly a year after 19 May of the Year’). If not, issue of Type 5 penalty will be inhibited, with the error message ‘Type 5 - +1 year late - Tax Geared cannot be issued until return is +1 year late.’ displayed.

Only one penalty of a particular type can be issued on the same day. If a Type is selected from the Type dropdown that already has been issued on the same day the error message ‘A further penalty of this Type cannot be issued today.’ is displayed.

Authorised Number

The field allows you to enter the Authorised Number provided by Central Policy: Tax Administration Advice, Queens Dock, Liverpool (Employer Compliance) when issuing a Type 5 duty-geared penalty.

Note: You will not be able to issue a Type 5 duty-geared penalty if you have not been provided with an Authorised Number.

During the embargo period (usually 2 weeks at the end of October) a message will be displayed when this window opens explaining that the embargo is currently in place. The [Issue] button will not be available to prevent penalties being issued. The [Calculate] button will remain available to allow validation of any penalties previously issued.

Number of Employees

The Number of Employees field allows you to enter the total number of P14 and / or CIS 36 / sub contractor returns included in the return for which the penalty is issued.

You must

  • Enter in the format 999999999

Where the automatic issue of a penalty notice has failed because of multiple returns you will need to identify the number of employees and the total Tax / NIC so that a link can be made with the correct return information for the P35 / CIS36 submitted.

For Type 5 duty-geared penalties the Number of Employee’s field will show the number held on ECS and will be disabled, as it does not require completion.

Penalty Period From

Use this field to enter the start date of the period for which the penalty is issued

  • Enter the start date in the format DD-MM-YYYY (for example 20-05-2005)

Where automatic issue of a penalty has failed, the proposed Penalty Period From will be displayed automatically.

For Type 5 duty-geared penalties the field will show the date the return became overdue and cannot be changed.

Period End

Use this field to indicate the end date of the period for which the penalty is to be issued

  • Enter the end date in the format DD-MM-YYYY (for example 19-09-2005). This can be either

    • The date of submission of the returns

    Or, where returns are still outstanding

    • The date of the interim penalty to be issued

Where automatic issue of a penalty has failed, the proposed Period End will be displayed automatically.

For Type 5 duty-geared penalties this field requires completion for the penalty to be issued. It will distinguish the penalty period from the Interim penalties already issued. However, a Type 5 penalty does not cover a set period, but is raised at a point in time.

Total Tax / NIC

The Total Tax / NIC field allows you to enter the total of Tax and NIC from the P35

  • Enter the total amount in the format 999999999

This will be used when the computer prepares the calculated penalty amount.

Where the automatic issue of a penalty notice has failed because of multiple returns you will need to identify the amount of total Tax / NIC and the number of employees so that a link can be made with the correct return information for the P35 / CIS36 submitted.

Note: If issuing a Type 5 duty-geared penalty, the name of this field changes to Estimated Duty.

  • Enter the estimated amount of PAYE / Student Loan Deductions / Class 1 NIC / Subcontractors deductions paid late or unpaid, as amended by Central Policy: Tax Administration Advice, Queens Dock, Liverpool (Employer Compliance) if applicable

Statutory Penalty Amount

If the Penalty Type is 1 - 4

  • Select the [Calculate] button (the system will calculate the statutory penalty amount)

You will not be allowed to make an entry in this field.

Note: If issuing a Type 5 duty-geared penalty, the name of this field changes to Penalty Amount.

  • Enter the amount advised by Central Policy: Tax Administration Advice, Queens Dock, Liverpool (Employer Compliance)

Mitigated Penalty

If the Tax and NIC total for that employer is less than the total penalty amount, mitigation will be given and the mitigated penalty amount will be shown in the mitigated penalty.

Manual issue of a penalty

The [Issue] button allows you to manually issue a penalty. Where you do this ECS will automatically record details of the penalty issued in the penalty area of the Penalty History screen.

To issue a penalty

  • Select the [Issue] button

You will receive the message

‘Are you sure you want to issue this Penalty?’

If you

  • Select the [OK] button a penalty notice will be issued and the details will be shown in the P35 Penalty History screen
  • Select the [Cancel] button a penalty notice will not be issued and you will be returned to the Issue Penalty screen

You will not be able to issue a penalty in the following circumstances

  • The Permanent Inhibition signal is set
  • The Insolvent signal has been set
  • The scheme type is exempt
  • The Employer’s Address To Name is blank
  • The RLS signal is set
  • The Temporary Inhibition signal is set
  • During the embargo period (usually 2 weeks at the end of October)

[Calculate] button

When you have completed the fields within this screen

  • Select the [Calculate] button to request a calculation of the penalty amount using the details entered or displayed on the Issue Penalty screen

The calculation will result in a penalty charge being displayed automatically.

Where the penalty is a Type 5 penalty the [Calculate] button will not be available as it is not required.

[Next] button

The [Next] button will move you to the next employer record on the End of Year Exceptions List screen.

You will not be able to use this button if you entered the Issue Penalty screen from the Employer P35 Penalty History screen.

[Exit] button

The [Exit] button returns you to the Penalty History screen.