PAYE21030 - employer records: maintain employer record: cessation of an employer record

This subject consists of the following

Cessation of an employer record

XP schemes

PSC schemes

Ceased employer has restarted

Employer record ceased in error

Cessation of an employer record

An employer record is ceased when it is no longer required. Some examples of when an employer record should be ceased are

• There is no longer any employee liable to Income Tax or National Insurance
• There are no longer any subcontractors
• The business has ceased to trade

This may be notified to you by

• The employer, contractor or agent
• A form P212 from Debt Management

Employer Annual Return

In most cases the entry of a cessation date on an employer record will trigger the automatic issue of a return. The exceptions to this are employer records that have the scheme types

• DPGEN
• DPNI
• DCNI
• TAS
• DOME

The facility to file cessation returns online is available from April 2005 for online filing of returns for 2005-06 onwards.

The Debt Management Office will then pursue the return for the final period of trading.

The return for the year of cessation could either be

• Sent back to the Processing Office who will note receipt and then send it immediately on to the Debt Management Office
• Submitted using online filing. The Central Exception Processing Team located at NICO will send the details immediately on to the Debt Management Office

Or

• Sent direct to the Debt Management Office

In all cases the Debt Management Office action will

• Agree any underpayment with the employer
• Obtain payment of any balance due
• Record receipt of any paper in-year cessation returns (either full or part returns) and retain these until the end of the deduction year

And then

• Send these to the Processing Office to process

Conditions

An employer record cannot be ceased if any of the following apply

• A skeleton employer record exists at the same reference
• The date entered is in an earlier tax year than one for which a claim for relief for deductions under CIS had been made by the employer
• Live PAYE employments are attached to the employer record
• A return has been received for a year later than the year of cessation
• The magnetic media indicators MTL ( Magnetic Tape List) and MTP6 ( Magnetic Tape P6) are set
• One or more of the following EDI indicators are set

Note: You must not attempt to cease an employer record if the year is dormant. For more information see PAYE21026.

An employer record should not be ceased if the following are shown on the BROCS record for a year later than the year of cessation

• (Format 3) Postings Summary

• (Format 9) Designatory Data For ASN

XP schemes

You must not close the employer record as a CIS record is still required to maintain the link between BROCS and the CIS contractor scheme record if you are informed that

• The employer still has at least one subcontractor

PSC schemes

You must not close or merge the employer record as a CIS record is still required to maintain the link between BROCS and the CIS contractor scheme record if you are informed that

• The employer no longer has employees but still has at least one subcontractor

Or

• A group of companies that work within the Construction Industry all have their PAYE / NIC paid through the parent company

In these circumstances you must amend the scheme type to XP. For more information see the Action Guide 'Change Scheme Type - PSC to XP' PAYE27035.

Ceased employer has restarted

You may be informed by an employer, contractor or agent that a business previously ceased has recommenced trading.

In this event you will need to restart the ceased employer record. See PAYE21215.

Note: When an employer record is restarted the computer will automatically clear any intervening years Cancelled one year only

A full review of the following should therefore be made

• Employer indicators
• Scheme type

Employer record ceased in error

Circumstances may arise when the cessation date entered was incorrect. In such circumstances the action you must take will depend on whether the correct date is earlier or later than the cessation date on the employer record.

Amendment to an earlier date

When the business ceased trading before the date held on the computer record the date can simply be amended to the correct date. Follow the Action Guide ‘Cessation Of An Employer Record’ PAYE21031.

Amendment to a later date

When the business ceased trading at a date later than the date held on the computer record you cannot amend the date shown.

In this situation the employer record must be restarted and then ceased at the correct date. Follow the Action Guides ‘Restarting An Employer Record’ PAYE21216 and ‘Cessation Of An Employer Record’ PAYE21031.

Note: When an employer record is restarted the computer will automatically clear any intervening years ‘Cancelled one year only’

A full review of the following should therefore be made

• Employer indicators
• Scheme type