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HMRC internal manual

PAYE Manual

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HM Revenue & Customs
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Employer returns: employer return work lists: CIS deductions advisory and post capture - up to 2006-07 (Action Guide)

Follow steps 1 - 34 below to deal with work items relating to captured annual returns, for years up to and including 2006-07, included on the

  • ‘CIS Deductions Advisory’ work list - for years up to and including 2002-03
  • ‘Post Capture’ work list - for years 2003-04 to 2006-07 inclusive

To deal with a work item on the ‘Post Capture’ work list for years 2007-08 and onwards, see PAYE53012.

The Guide is presented as follows

  Step 1
   
  Steps 2 - 3
  Steps 4 - 6
  Step 7
  Steps 8 - 9
  Steps 10 - 12
  Steps 13 - 15
  Steps 16 - 18
  Steps 19 - 24
  Steps 25 - 32
  Steps 33 - 34

 

For details of how to access any of the Employer Business Service functions, use PAYE057.

 

Initial action

The ‘CIS Deductions Advisory’ work list contains work items for every captured return that contains a positive monetary amount in the CIS deductions suffered field.

The ‘Post Capture’ work list contains work items for every captured return where one or more of the following applies

  • There is a positive monetary amount in the CIS deductions suffered field
  • There is a tax credit funding discrepancy
  • There is a tax credits paid discrepancy

Notes:

  • When taking action to deal with a work item on either of these work lists, you must ensure that all post capture checks are worked at the same time
  • When dealing with a work item on the ‘Post Capture’ work list, you must also ensure that you have considered each reason why the work item has been generated on the work list before you delete the work item
1. Access Function WORKLISTS and select
   
  Worklist Type ‘CIS Deductions Advisory’ or ‘Post Capture’ from the drop down menu
  Your Organisation Unit number from the drop down menu and highlight the work item(s) you want to make ‘Working’ next
  Select the [OK] button - when asked ‘Do you wish to work the selected item(s)’
  Select the [Yes] button

CIS deductions suffered

2. Use Function VIEW EOY RETURNS HISTORY to ensure that you have received and processed all appropriate returns, and return parts
   
  If you have received all appropriate returns, or return parts go to step 3 -otherwise
  Await receipt of the outstanding returns, or return parts, before proceeding with that work item, unless you are dealing with a provisional employer repayment request, in which case see PAYE47106
3. Compare the CIS deductions suffered amount on the captured return(s) with the CIS25 voucher figure held on the CIS system
  To do this
  Open the CIS system using Interim Single Sign-On and choose either of the following CIS functions - then
  CLERICAL CASEWORKER PROCESSING
  or
  CASE MAINTAINER PROCESSING
  Select ‘File’ on the toolbar and select ‘Taxpayer’ from the drop down menu
  Enter the employer reference, select the [OK] button
  Go to step 7
  Otherwise, if you encounter problems when entering the employer reference into CIS, which may affect you making the CIS compare, go to step 4
  Note: If there has been a merger or succession, add together the CIS25 figures from the CIS system for both the old and the new employer references.

Problems obtaining the CIS data

4. If you are unable to obtain the employer’s CIS details using the employer reference, enter the Unique Taxpayer Reference (UTR) for the employer, which can be obtained from the following sources
   
  Use Function VIEW EMPLOYER NOTES and check the employer record pad to review the information recorded (especially form P510)
  Corporation Tax (CT) section or file
  CIS section
  If you have been able to establish the company UTR, and this is not held on the employer’s EBS record, use EBS Function AMEND LIMITED COMPANY & DIRECTOR DETAILS to update the employer record
  Go to step 7
  Note: When entering a company UTR the office number should be entered in field one. If you do not know the office number for the taxpayer a default of 001 should be entered.
5. If you are unable to find the UTR, or the Accounts Office reference is not found or recognised on CIS
  Contact the employer and request the UTR
  Where the employer does not know the UTR, request
  Their company registration number (CRN)
  And
  The date they became a limited company
  Use COTAX Function TRCT (Trace Taxpayer) to obtain the UTR based on the information supplied by the employer
  Use EBS Function AMEND LIMITED COMPANY & DIRECTOR DETAILS to update the employer’s EBS record with the UTR
  Go to step 7
6. Where you establish that the employer was not a limited company for the year of the claim, do not continue to make the compare at this stage
  Contact the employer and advise them that, based on the information you hold, they were not a limited company for the year of the claim and as such they are not eligible to make a claim for CIS deductions suffered on their P35. Inform them that you will be arranging for their P35 to be adjusted accordingly
  BF your papers for 4 weeks for a reply
  If you receive a reply which states that the employer was in fact an eligible limited company
  Refer the matter to the EBS Helpdesk for advice, otherwise
  If no reply is received at the BF date or the employer confirms that the claim was made in error
  Prepare a pro-forma additional return to reduce the CIS deductions suffered amount to nil
  For tax years 2004-05 onwards, use Function RECORD RETURN RECEIPT to record receipt of a pro-forma complete return and ensure you select the RSI2 radio button
  For all years, use Function CAPTURE EOY RETURN DETAILS to capture a pro-forma additional return to reduce the CIS deductions suffered figure to ‘nil’
  Go to step 33

Making the CIS compare

7. Within the List Taxpayers screen in CIS, select the line with the appropriate Scheme Identified (001, 002 and so on or EMP) and then select the [Captured Vouchers] button
   
  Enter the relevant tax year ended, ensure the voucher type ‘CIS25’ is selected from the drop down menu, select the [P35 Comparison] button
  If the advisory message ‘This taxpayer is not a company. Do you wish to continue?’ is displayed
  Go back to step 6
  Otherwise, the P35 Comparison screen will be displayed
  Compare the figure displayed as ‘Tax Captured from CIS25 Vouchers’ within this screen with the amount of CIS deductions suffered captured from the P35
  If the figures agree or the difference is within 10 per cent of the P35 figure or where the difference is greater than 10 per cent but this amount is less than £300
  Accept the claim in full and go to step 13
  Otherwise, go to step 8

CIS figure and return disagree

8. Your next action will depend upon whether the amount held on CIS is greater than the amount shown in the ‘CIS deductions suffered’ box
   
  If the amount held on CIS is greater than the amount shown in the ‘CIS deductions suffered’ box
  Accept the claim made on the P35
  Go to step 13
  If the amount shown in the ‘CIS deductions suffered’ box is greater than the amount held on CIS (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
  Accept the claim made on the P35
  Go to step 13,
  Otherwise go to step 9
9. If the amount shown in the ‘CIS deductions suffered’ box is greater than the amount held on CIS (This content has been withheld because of exemptions in the Freedom of Information Act 2000) (This content has been withheld because of exemptions in the Freedom of Information Act 2000) (This content has been withheld because of exemptions in the Freedom of Information Act 2000) , you must restrict the amount you enter into CIS, as CIS25 credit, to the amount displayed in CIS
  From the P35 comparison screen in CIS
  Enter the figure of CIS credit displayed in CIS
  Leave the Additional CIS25 Tax Verified box as ‘N’
  Select the [Save] button
  Telephone the employer and ask them to submit all relevant CIS25 tax payment vouchers or other evidence of CIS deductions to substantiate the claim. There is no hard and fast rule on what is acceptable as evidence of deductions, however, examples may include
  Payslips and / or pay packets given to the subcontractor by the contractor, detailing payments and deductions made
  The subcontractor’s paid invoices showing appropriate deductions if these are corroborated by paid cheques
  A written contract, or other relevant correspondence, between the contractor and the subcontractor
  Note: This contact must be made at the same time as contact is made to resolve any other discrepancy. Do not contact the employer on separate occasions to deal with each aspect you are reviewing.
  On receipt of the vouchers go to step 10
  If the employer does not have vouchers, or does not reply
  Go to step 11

On receipt of vouchers

10. Access the CIS system. Compare the tax deducted on the vouchers with the total shown on the return and CIS
   
  If the figures agree (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
  Go to step 13
  Otherwise, if after identifying the vouchers missing from CIS (Word 28KB) the figures still disagree but
  The total on the vouchers does not cover the discrepancy
  Go to step 11
  The total on the vouchers does cover the discrepancy
  Allow the claim in full
  Go to step 13
11. Contact the contractor’s processing office and request them to review form CIS36 (Word 31KB)
  If form CIS36 corresponds with the amount claimed on the return go to step 33, otherwise go to step 12
12. If the amounts do not correspond, or form CIS36 can not be found, you will only be able to give credit for the amount that has been verified
  Contact the employer again. Advise them that unless they can provide evidence to substantiate the missing vouchers you will only be able to give credit for the verified amount
  Refer a copy of the papers with the Voucher Pursuit stencil (Word 45KB) to DMB CIS Unit (Shipley). Include photocopies of the CIS25 vouchers, not the originals
  Prepare a pro-forma additional return to reduce the CIS deductions suffered amount to the verified amount
  For tax years 2004-05 onwards, use Function RECORD RETURN RECEIPT to record receipt of a pro-forma complete return and ensure you select the RSI2 radio button
  For all years, use Function CAPTURE EOY RETURN DETAILS to capture a pro-forma additional return to reduce the CIS deductions suffered figure to the verified amount
  Go to step 13

Non verified CIS deductions

13. Input data into CIS
   
14. Take a print of the CIS screen
15. Use Function AMEND EMPLOYER NOTES to record your actions and then file the screen print with either the ER pad or, where the original return was a paper P35, in the annual run of P35 returns
  Go to step 33

Inputting data into CIS

  Note: If an employer tells you that they have paid Working Tax Credit after 31 March 2006 and / or has carried forward TCF into 2006-07, you should advise the employer to contact the Employer Helpline on 0300 200 3200 (text phone 0300 200 3212).
   
  You must first obtain certain information to resolve the funding discrepancy (Word 26KB). When you have obtained the information
16. Use EBS Function VIEW EOY RETURNS HISTORY to check if the Funding Discrepancy Indicator is set
  If the indicator is set, go to step 17
  If the indicator is not set go to step 33
17. Compare the captured figure of tax credit funding authorised shown on EBS with the entry made on the P35
  If the figures disagree go to step 18
  If the figures agree go to step 19
18. The amount you have captured is incorrect. You must
  Process a correction return for a Net Adjustment (Word 30KB) amount ,which when added to the previously captured figure, will result in the consolidated position (Word 31KB) being equal to the funding figure entered on the return
  At the top of the original return, note in green, the words ‘Correction return processed to correct keying error for TCF’
  Where a discrepancy still exists go to step 19
  Otherwise go to step 33

Review funding authorised

19. Use NTC Function VIEW EMPLOYER ACCOUNT to establish the total funding figure received by the employer
   
  (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
  (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
  (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
  (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
  (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
  (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
  (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
20. If you will need to investigate the discrepancy by contacting the employer
  Advise the employer that there appears to be a discrepancy between the amount of funding they have entered on their return and the funding figure we hold
  Ask the employer to check the final form TC712 received for the year and confirm the amount shown for ‘Total funding in tax year’
  Note: Where there has been a merger or succession the ‘Total funding in tax year’ must include the amount shown on the TC712 for both the old and new employer references.
  The next action will depend on the response from the employer
  If the funding was allocated to a wrong employer reference go to step 21
  If the funding should have agreed with the amount on NTC go to step 22
  If the employer advises that some of the funding was not used go to step 23
  If you are unable to resolve the discrepancy go to step 24
21. If funding was allocated to a wrong employer reference
  Establish if the employer references are connected (employer references are connected when they relate to the same employer, legal entity)
  If the employer references are not connected
  Ask the employer to pay back the amount of funding used against the wrong employer reference. If the employer is unwilling to do this go to step 24
  If the employer references are connected and relate to the same employer
  Send an email to ‘TCO-BDD,TAL-S1 (TCO Preston 6)’ with the title ‘Movement of Employer Funding request PAYE53011’ and request that the relevant funding is reallocated against the correct employer reference. Note: It is essential that you use the correct email title to allow the TCO to identify these cases.
  When the funding has been reallocated go to step 33
22. If you are able to agree that the amount entered onto the return should be the amount shown on NTC
  Prepare a pro-forma additional return for a Net Adjustment (Word 30KB) amount ,which when added to the previously captured figure, will result in the consolidated position (Word 31KB) being equal to the funding figure shown on NTC
  (This content has been withheld because of exemptions in the Freedom of Information Act 2000) (This content has been withheld because of exemptions in the Freedom of Information Act 2000) (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
  (This content has been withheld because of exemptions in the Freedom of Information Act 2000) (This content has been withheld because of exemptions in the Freedom of Information Act 2000) (This content has been withheld because of exemptions in the Freedom of Information Act 2000) (This content has been withheld because of exemptions in the Freedom of Information Act 2000) (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
  Go to step 33
23. If the employer advises that some of the funding was not used in the year
  If the year is 2003-04 or 2004-05 and the funding has been used in the following year
  Send an email to ‘TCO-BDD,TAL-S1 (TCO Preston 6)’ with the title ‘Movement of Employer Funding request PAYE53011’ and request that the unused funding is reallocated to the following year.  Note: It is essential that you use the correct email title to allow the TCO to identify these cases.
  When the funding has been reallocated - go to step 33
  If the year is 2005-06
  Advise the employer that the funding can not be reallocated to 2006-07 and all the funding must be declared on the 2005-06 return
  Prepare a pro-forma additional return for a Net Adjustment (Word 30KB) amount ,which when added to the previously captured figure, will result in the consolidated position (Word 31KB) being equal to the funding figure shown on NTC
  (This content has been withheld because of exemptions in the Freedom of Information Act 2000) (This content has been withheld because of exemptions in the Freedom of Information Act 2000) (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
  (This content has been withheld because of exemptions in the Freedom of Information Act 2000) (This content has been withheld because of exemptions in the Freedom of Information Act 2000) (This content has been withheld because of exemptions in the Freedom of Information Act 2000) (This content has been withheld because of exemptions in the Freedom of Information Act 2000) (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
  Go to step 33
24. If you have been unable to resolve the discrepancy because
  The employer advises that the funding amount entered on the return was correct
  or
  The employer is unable to agree to a correction to their return
  or
  You have been unable to contact the employer after at least two attempts at different times on different days
  Complete a tax credit recovery stencil (PDF 11KB) and forward to the relevant Debt Management recovery office (DMB) to investigate
  Note: If the work item relates to a case where an overpayment disposal instruction is required, you must wait for a response from DMB before proceeding with the overpayment disposal instruction.

Tax credits paid

On 9 February 2007, all Tax Credit Paid (TCP) entries on the Post Capture work list were removed and archived. Any entries for TCP discrepancies generated after that date will continue to populate this work list but these new cases must only be reviewed where an employer overpayment arises. You must continue to work cases shown on the work lists under the categories ‘TCF’ and ‘CIS’.

Note: In all cases where you are required to investigate an apparent employer overpayment and the employer has paid tax credits, you must continue to reconcile any amounts of ‘TCP’ shown on the relevant P35, even though there may not be an entry for that employer record on the Post Capture work list.

25. Use EBS Function VIEW EOY RETURNS HISTORY to compare the captured figure of tax credit paid shown on EBS with the entry made on the P35
   
  If the figures disagree go to step 26
  or
  If the figures agree go to step 27
26. The amount you have captured is incorrect. You must
  Process a correction return for a Net Adjustment (Word 30KB) amount ,which when added to the previously captured figure, will result in the consolidated position (Word 31KB) being equal to the tax credits paid figure entered on the return
  At the top of the original return, note in green, the words ‘Correction return processed to correct keying error for TCP’
  Where a discrepancy still exists go to step 27
  Otherwise go to step 33
27. Use NTC Function VIEW PVE DETAILS FOR EMPLOYER to establish the total authorised PVE for the year
  If the total authorised PVE figure agrees with the amount claimed on the P35, no further action is required in respect of this aspect
  Go to step 33
  (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
  (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
  (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
  (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
  (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
28. If you will need to investigate the discrepancy by contacting the employer
  Advise the employer that there appears to be a discrepancy between the amount of tax credits paid entered on their P35 and the figure we hold
  Ask the employer to confirm that the amount entered on their P35 agrees with the tax credit notifications received for that employer reference
  If discrepancies are identified ask for details of those applicants involved (names, national insurance numbers and PAYE reference numbers quoted on those notifications)
  Your next action will depend on the employers’ response
29. If the employer advises the tax credits paid amount entered on the P35 was incorrect (and should have agreed with the total authorised PVE figure shown on NTC)
  Agree any amendment to the P35 figure with the employer, when agreement is reached
  Prepare a pro-forma additional return for a Net Adjustment (Word 30KB) amount ,which when added to the previously captured figure, will result in the consolidated position (Word 31KB) being equal to the PVE figure shown on NTC
  (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
  (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
  Go to step 33
30. If the employer advises you that
  They have received incorrect tax credit notifications
  And
  The tax credits paid amount entered on the P35 incorrectly includes payments made to applicants held under another employer reference
  You will need to amend both the
  PVE figure shown on NTC
  And
  The tax credits paid amount entered on the P35
  Agree any amendment to the P35 figure with the employer
  Establish if the employer references are connected. Note: Employer references are connected when they relate to the same employer
  If the employer references are unconnected or do not relate to the same employer
  Send a form TC681 (available on LFC 2000) to the Employer Liaison Team (in the Tax Credit Office) advising them of the applicants to be removed from the employer reference
  Prepare a pro-forma additional return for a Net Adjustment (Word 30KB) amount ,which when added to the previously captured figure, will result in the consolidated position (Word 31KB) being equal to the P35 amount agreed with the employer
  (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
  (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
  Go to step 33
  If the employer references are connected and relate to the same employer
  Use NTC Function AMEND PVE DETAILS to move the PVE award for each applicant to the correct employer reference
  Note: If, when attempting to move an applicant, the error message ‘Scheme type does not support PVE’ is displayed, you will need to take the following action.
  Use EBS Function AMEND EMPLOYER SCHEME DETAILS to change the scheme type
  On the next working day, after the scheme type has changed, use NTC Function AMEND PVE DETAILS to move the PVE award for each affected applicant to the correct employer reference
  Send a form TC681 (available on LFC 2000) to the Employer Liaison Team (in the Tax Credit Office) advising them of the applicants to be removed from the employer reference
  Prepare a pro-forma additional return for a Net Adjustment (Word 30KB) amount ,which when added to the previously captured figure, will result in the consolidated position (Word 31KB) being equal to the amount agreed with the employer and the PVE figure shown on NTC
  (This content has been withheld because of exemptions in the Freedom of Information Act 2000) (This content has been withheld because of exemptions in the Freedom of Information Act 2000) (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
  (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
  Go to step 33
31. If the employer advises you that
  The tax credits paid amount entered on the P35 was correct
  And
  NTC includes payments made to applicants held under another employer reference
  Agree any amendment to the P35 figure with the employer
  Establish if the employer references are connected. Note: Employer references are connected when they relate to the same employer
  If the employer references are unconnected or do not relate to the same employer
  Send a form TC681 (available on LFC 2000) to the Employer Liaison Team (in the Tax Credit Office) advising them of the applicants to be removed from the employer reference
  Go to step 33
  If the employer references are connected and relate to the same employer
  Use NTC Function AMEND PVE DETAILS to move the PVE award for each applicant to the correct employer reference
  Note: If, when attempting to move an applicant, the error message ‘Scheme type does not support PVE’ is displayed, you will need to take the following action.
  Use EBS Function AMEND EMPLOYER SCHEME DETAILS to change the scheme type
  On the next working day, after the scheme type has changed, use NTC Function AMEND PVE DETAILS to move the PVE award for each affected applicant to the correct employer reference
  Send a form TC681 (available on LFC 2000) to the Employer Liaison Team (in the Tax Credit Office) advising them of the applicants to be removed from the employer reference
  Go to step 33
32. If you are unable to reconcile the discrepancy with the employer or the employer does not respond to your enquiries
  Consider preparing a pro-forma P35 to account for the Tax Credits paid, in accordance with ‘Overpayment notification (Action Guide)’ at PAYE47061
  Go to step 33

Deleting the work item

33. When you have dealt with every aspect for which the work item was generated on the work list, use the [Delete] button to delete the work item from the list
   
34. Where there is an apparent employer overpayment for the work list item, continue to deal with this in accordance with ‘Overpayment notification (Action Guide)’ at PAYE47061