ECH22515 - Yield Recording: Failure to Submit Returns - No Scheme

An employer is considered to have no scheme where

• a pseudo scheme has been opened by RIAT to register the case on ECS or,
• the scheme has been permanently cancelled or,
• for any year where the scheme has been cancelled COYO.

An employer who has no scheme may have

• operated PAYE, CIS and/or NICs but not made a return to HMRC
• failed to operate PAYE, CIS and/or NICs

The ECO should

• calculate and pursue the underpayment for earlier years,
• calculate and pursue interest,
• consider penalties (see note),
• ensure that a scheme is opened ( the date from which the scheme is opened will depend on the method of recovery),
• calculate the current year underpayment to the date of the review,
• refer the current year underpayment to DM&B along with any payment collected,
• claim the full amount of the underpayment, interest and penalties for earlier years on ECS,
• claim the amount of the current year underpayment referred to DM&B on ECS as referral to another section.

The ECO must not

• claim tax and NICs for the current year, which has been deducted but not paid to HMRC except in the above circumstances

Note:

Penalties for failure to make an EOY return are normally pursued by End of Year Section. Employer Compliance should pursue and claim such penalties where it has been necessary to

• open a new scheme,
• reopen a permanently cancelled scheme,
• reopen a scheme that has been cancelled one year , or
• in any other circumstances in which an automatic penalty has not been charged.
• Where it is appropriate to pursue such penalties the ECO should
• follow the guidance at ECH21020 and ECH21025

Care should be taken to ensure that the End of Year Section do not duplicate penalty action.