PAYE42025 - employer returns: capture employer return - up to 2004: NIL returns - up to 2004
Note: This subject should be used for tax years up
to 2003/04 only.
An employer / contractor only has to make an annual return
(forms P35 & P14) where they have used a deductions working
sheet (P11 or equivalent) for at least one employee during the
year. For example
- Where earnings were above the Lower Earnings Limit
Or
- Where the employer was instructed to operate a code number
Employers do not need to send back a P35 just because we sent them one. For example, a P35 is not necessary
Where all the employees were paid below the Lower Earnings Limit for National Insurance (assuming tax was also not due)
Or
- Where there were no employees during the year and the directors’ remuneration was nil
However, employers may wish to tell us that no return is due to
avoid the issue of automatic penalties for not filing a return.
Employers can tell us that they do not need to make a return
by
- Telephone
- Post
Or
- Sending the P35 back marked nil
If you are told by telephone you must ask two basic questions to satisfy yourself that no return is due
- Have you been authorised to pay tax credits to any employees?
- Was any employee paid enough to use a Deductions Working Sheet?
An answer of ‘yes’ to either question means that
this is not a nil return and you should tell the employer that they
must make a return.
If you have decided that no return is due the year should be
cancelled one year only. You
must not set COYO without some notification from
the employer.
Cancel one year only
Under certain circumstances you may formerly have cleared a
year cancelled one year only (COYO) and a subsequent return is
received. You
must record receipt and capture
all returns that are received, subject to the
normal Pre Capture checks, regardless of whether they are 'NIL' or
not.
For employer records where a return
has not been received and
none are due, you may clear a year COYO if
all of the following criteria are met
- No payments of earnings equivalent to or above the Lower Earnings Limit have been made to employees
- There is no evidence of payments being made to subcontractors with or without tax deductions being made from these payments
- No payments have been made or are due to Banking Operations or a Debt Management Office relating to the year of the return
- No tax credits have been authorised or funding payments made to the employer
- No Class 1A NIC signal held on BROCS (viewable using Format 9) indicating the employer is liable to pay Class 1A NIC charges
For more information see
PAYE21021
Forms P35 with forms P14
As a result of changes to the legislation relating to
entitlement to benefits NICO require submission of forms P14
where
- Details of earnings are shown in column 1a of form P14
And those earnings
- Reach or exceed the NIC Lower Earnings Limit, even though no contributions may be paid
When a form P35 recording nil deductions is received together with forms P14 that show any entries in the earnings column 1a you must
- Use Function RECORD RETURN RECEIPT to record the receipt of the return
- Use Function CAPTURE EOY RETURN DETAILS to capture the return details
Review
When a nil return is received it is important that the
employer record is reviewed to ascertain whether it is appropriate
to cease or cancel the employer record. This will ensure that only
live employer records are held where a return is expected and
due.
