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HMRC internal manual

PAYE Manual

HM Revenue & Customs
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Employer returns: employer EOY penalties: handling EOY interim penalty enquiries (Action Guide)

Follow steps 1 - 5 as appropriate on receipt of a letter from the employer confirming

  • The employer ceased before 6 April this year


  • That a complete return has been submitted

Note: An employer may appeal against a penalty notice and a list of the unusual events that could not be reasonably foreseen or are beyond their control, that we may accept as a reasonable excuse can be found at ECSM31100. The employer must have taken all reasonable steps to file the return as soon as the problem which stopped filing, ended. On receipt of an appeal, follow the guidance in the Appeals, Reviews and Tribunals Guidance (ARTG).

Employer ceased before 6 April this year

1. Check if there is any evidence of employer activity in the most recent closed year
  * If there is no evidence
  * Discharge the penalty without further enquiry and take steps to close the PAYE scheme
  * If there is evidence of activity (for example, payments on BROCS)
  * Stand-over the penalty and query the discrepancy with the employer
  Note: If BROCS shows a credit or re-allocation of the previous year’s overpayment, and / or an award of the tax-free payment for filing online, discharge the penalty without further enquiry. You must arrange for repayment of the amounts shown on BROCS before taking action

Employer claims a complete return has been submitted

2. Use ‘Tracking Tool’ to establish if the return information has been received and consider the following scenarios
    ### Part or parts of the return are still expected
  3. A return is not complete until all part(s) are submitted
    * Tell the employer what part(s) are still outstanding and to send the missing parts without further delay
    The penalty is correct and collection should proceed
    ### Return held at CEPT for a validation failure
  4. Until the validation failure has been handled by CEPT, it will not be possible to determine whether a full return has been submitted
    * Stand-over the penalty until clearance of the validation failure
    ### Test Returns
  5. A return submitted as a ‘test in live’ return is not a valid return. The test facility allows employers to test a return submission and should the test return pass our Quality Standard, an email message will be received from the Government Gateway
    If you establish that an employer or agent has submitted a test return
    * Advise the employer to send the actual return without delay to limit the amount of the final penalty that will be calculated on receipt of the return
    You can never be sure if an employer has tested true figures and a return submitted as ‘test in live’ is not regarded as received by HMRC
    The penalty is correct and collection should proceed