ECH22520 - Yield Recording: Failure to Submit Returns - Scheme Open
Where an employer has a live PAYE scheme but returns have not been submitted an underpayment may arise due to
- a failure to pay over the full amount due to HMRC (a shortfall in remittances),
- a failure to operate PAYE, CIS and/or NICs.
Return up to 12 months late
If the return is less than 12 months late the ECO should
- calculate and pursue the amount of the shortfall in remittances,
- calculate and pursue the amount of any failure to operate PAYE, CIS and/or NICs,
- calculate and pursue any interest due,
- where possible collect any outstanding returns (appropriately corrected) and forward them to the End of Year Section ( ECH22507, ECH9005, ECH9035),
- Consider penalties in accordance with ECH21020. (see note)
- claim the amount of any failure to operate and the associated interest on ECS.
The following amounts cannot be recorded as Review yield but where the return has been secured can be recorded as an Employer Amendment
- the shortfall in remittances and
- any interest due on that amount
- the amount of any fixed penalties that have or would be issued via ECS
Note
If penalties have already been issued by ECS the ECO should
attempt to collect the amount of the penalties along with any
underpayment
Return more than 12 months late
If the return is more than 12 months late the ECO should
- calculate and pursue the amount of the shortfall in remittances,
- calculate and pursue the amount of any failure to operate PAYE, CIS and/or NICs,
- calculate and pursue any interest due,
- where possible collect any outstanding returns (appropriately corrected) and forward them to the End of Year Section ( ECH22507, ECH9005, and ECH9035,
- consider penalties in accordance with ECH21020 and ECH21025,
- claim the amount of the shortfall in remittances, any failure to operate underpayment and the interest on ECS as P35 obtained,
- claim the amount of the penalty as
-
- P35 obtained if the penalties have been issued by ECS,
- Class 6 Settlement if the penalties have been collected via a contract settlement
If it is not possible to collect the outstanding returns the ECO should
- document the reasons why on the papers,
- pursue the underpayment by another method,
- inform End of Year Section of the action taken,
- ensure that individual National Insurance records are updated.
Where a failure to make CIS deductions is identified for an open year the ECO should
- recover the underpayment by way of a Class 6 settlement ( ECH14200),
- calculate a current year adjustment in accordance with ECH9045,
- calculate and collect interest,
- consider penalties ECH21020, ECH21025,
- claim the full amount of the underpayment, interest and penalties on ECS,
- claim the current year adjustment on ECS.
Care should be taken to ensure that the End of Year Section do
not duplicate penalty action.
Where irregularities for an open year are to be included in a
contract settlement the ECO should
- follow the guidance at ECH22540,
For guidance on how to claim a current year adjustment the ECO should
