PAYE21031 - Employer records: maintain employer record: cessation of an employer record (Action Guide)

Checks to be made before cessation

Step 1

Check the scheme type

Step 2

Check for payments

Step 3

Check for tax credits

Steps 4 - 13

Check for Class 1A liability

Steps 14 - 16

EDI indicator present

Step 17- 18

Employee records

Steps 19 - 21

CIS deductions

Steps 22 - 23

Final action

Steps 24 - 26

1.

Review the information provided. Satisfy yourself that the employer record is no longer required. See PAYE21030 for further information

2.

Use Function VIEW EMPLOYER TRADE AND SCHEME DETAILS to check the scheme type

• If the employer record is a simplified scheme mark the papers (if you are processing a return) ‘simplified scheme’ in red ink

3.

Use Function VIEW BROCS (format 3) Posting Summary to check that no payments of tax or NI Contributions appear for a subsequent year

• If incorrect payments are shown on the record

• Arrange for DMB to reallocate the payment

• Where the payment is correct

• Advise the employer that you are unable to cease the scheme and that they must complete a return as usual

If the cessation date is 5 April 2005 or earlier use the following to check whether the employer has been authorised to make tax credit payments to employees for a year later than the year of cessation.

4.

Use Function VIEW BROCS (format 9 Designatory Data for ASN) to check whether the TC EMPLOYER indicator is set

5.

Use NTC Function View PVE Details to check that no tax credit payments have been authorised. Note: Tax credits will only be paid by an employer for years up to 2005-06

Where the employer has been authorised to pay tax credits

6.

Use Function VIEW EMPLOYEES

• Select ‘Linked Employees’

• Identify the tax credit employments attached to the employer record after the year of cessation

• Where exceptionally, more than 10 employee records are attached to the employer record, go to step 14

7.

Advise the employer that you are unable to cease the PAYE scheme because they have been authorised to pay tax credits for a year after the year of cessation. Confirm whether

• Tax credits were paid to the employees listed during that year - go to step 8

• If the employer paid the employees under a different payroll - go to step 9

• If the employer does not know the employees go to step 26

8.

Advise the employer to complete and submit form P35 and form(s) P14 for the year and agree the correct cessation date

Tax Credits paid under a different payroll

9.

Use NTC Function AMEND PVE DETAILS to transfer the entire PVE award to the correct employer reference then go to step 11

10.

If the employer does not know the employee(s) listed use Form TC681 to notify the Employer Liaison Team (ELT) at the TCO that an applicant is not known to the employer then go to step 11

11.

Use Function AMEND EMPLOYER SCHEME HISTORY to enter a cessation date of 31 March for the year that the latest tax credits where paid

Note: Where the scheme type is PSC or XP you must enter a ‘Date Notified’, which is the date you received the information or select one of the following check boxes

• ‘Date Not Known’ - where you do not know the date you received the information
   
  Or

• ‘Date Not Applicable’ - where the update is being made from information not received from the employer

If there is an intervening year for 2003-2004

12.

Follow the Action Guide ‘Nil Returns - Up to 2004’ PAYE42026 to process a proforma nil return

If there is an intervening year for 2004-2005 or 2005-2006

13.

Follow the Action Guide ‘Nil Returns - 2005’ onwards PAYE43031 to process a proforma nil return. For this situation only set RSI 2 when recording receipt of the return

14.

Use Function VIEW BROCS (Format 9 Designatory Data for ASN) to check whether the CLASS 1A NIC EMP indicator is held for the year after the year of cessation

• If this indicator is set and you are certain that this is a true cessation use ECS (screen P11D(b)) to remove the indicator for any year(s) later than the year of cessation

• If this indicator is set and a P11D(b) is due do not enter a cessation date

15.

Use Function VIEW EMPLOYER INDICATORS to check whether any of the following indicators are set

• AUDREP

• COMPREP

• LUMPSUM

• RNA

• TRADISP

• WRONGOP

If any of the indicators are set follow step 16

16.

Use Function VIEW EMPLOYER NOTES and check the employer record pad to review the information recorded

• Find the report relating to the indicator(s)

• Forward a Memo to Debt Management - Cessation - indicators set (Word 24KB)

• Attach the report to your memo

If you have attempted to enter a cessation date on an employer record but the following error message is presented ‘EDI indicators prevent cessation of employer record’ you must

17.

Put the case to one side for 5 days to await action by the EDI Live Service Team to clear the case from the ‘EDI Cess/Canc Exceptions’ work list

18.

After 5 days (if the EDI Live Service Team have not been in contact with you to discuss the next action to take)

• Use Function AMEND EMPLOYER SCHEME HISTORY to attempt to enter a cessation date again

Note: Where the scheme type is PSC or XP you must enter a ‘Date Notified’, which is the date you received the information or select one of the following check boxes

• ‘Date Not Known’ - where you do not know the date you received the information
   
  Or

• ‘Date Not Applicable’ - where the update is being made from information not received from the employer

• If the cessation date is accepted go to step 22

Otherwise

• If you are still unable to set the cessation date contact the Online Services Helpdesk and

• Explain that you have been unable to enter a cessation date on the employer record because EDI indicators are already set

• Agree with EDI Live Service Team what action should now be taken

If you try to enter a cessation date and there are live PAYE employments attached to an employer record you will be presented with the error message ‘You cannot enter a cessation date. Live taxpayer records attached to scheme’.

If you receive this message

19.

Use EBS Function VIEW EMPLOYEES

• Select ‘Live Employees’ to identify the employments attached to the employer record

20.

Telephone the employer immediately 

• Explain that you are trying to close the taxpayer record but it holds live employee(s)

• Establish the date on which the employee(s) left the employment
   
  And

• Request form(s) P45

21.

Where Employees not known

• Forward an email to the relevant PAYE section WAM to advise them that the employer does not know the employees. Include a list of employees with the following information

• Name

• NINO

• Date scheme ceased

• Request a Date of Leaving is entered onto each employee record; select ‘User’ as the cessation source

If the employer record holds details of CIS deductions for a later year the following error message will be displayed ‘CIS Dedns Suffered held on the record for a year later than you have entered’

22.

Review the papers held to establish if it is appropriate to attempt to cease the employer record

• If this was not the correct action consider alternative action

Otherwise

23.

Telephone the employer immediately 

• Explain that you are trying to close their record but it holds CIS deductions for a later year

• Establish the correct cessation date

24.

Advise the relevant CT / SA Team if applicable of the cessation

25.

Review previous years to establish if it is appropriate to set the COYO indicator or process a return to clear the year

26.

Use Function AMEND EMPLOYER NOTES to record your actions and then file the papers in the employer record pad