PAYE43030 - employer returns: capture employer return – 2005 onwards: NIL returns - 2005 onwards
Note: This subject should be used for tax years
2004/05 onwards.
An employer / contractor only has to make an annual return
(forms P35 & P14) where a PAYE scheme is required.
A PAYE scheme is
only required where one or more of the following
occurs / arises
- Payments at or above the lower earnings limit are made to directors / employees
- Payments are made to a director / employee who receives payments from another job or pension
- Benefits and / or expenses are provided to a director / employee
- Payments are made to subcontractors
Or exceptionally
- When a limited company wishes to claim a refund of CIS deductions suffered only.
Note: If
none of the above occur it is not necessary for
the employer / contractor to have a PAYE scheme.
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
If you are told by telephone you must ask the basic questions to satisfy yourself that no return is due
- Has the employer been authorised to pay tax credits to any
employees or received any tax credit funding (for years to
2005-06)?
- Was any employee / director paid enough to use a deductions
working sheet?
- Have payments been made to an employee / director who receives
payments from another job or pension?
- Have benefits / expenses been provided to employees / directors
- Have payments been made to a subcontractor
And exceptionally
- Is the employer a limited company and intend to claim CIS
deductions suffered only?
For years 2005 to 2007
An answer of ‘yes’ to any of the above questions,
apart from Number 4, 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 follow
PAYE21021.
For 2008 onwards
An answer of 'yes' to any of the above questions, apart from
Question 4, means that this is not a nil return and you should tell
the employer that they must make a P35 return.
Where the answer to Questions 5 is 'yes' follow
PAYE27035 to consider changing the
scheme type.
If you decide that no return is due, follow
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 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.
