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PAYE51030 | Employer returns: employer EOY penalties: manually inhibiting penalties

From HM Revenue & Customs · PAYE Manual

A penalty can be prevented from being issued automatically by ECS by setting a penalty inhibition signal in ECS.

There are two types of penalty inhibition

  • Temporary

And

  • Permanent

Temporary inhibition signal

This signal

  • Can only be set by the person nominated as an authorised officer

And

  • Is set on ECS

Setting this signal will inhibit the issue of penalties for the year specified only. If this signal is later unset for the same year, the case will then be included in the automatic penalty process for that year.

Cases which have been temporarily inhibited will be included in the temporary inhibition exception lists which are displayed on screen in ECS.

This signal may be set for a number of reasons, which include

  • In a complaint case where the issue of a penalty may be inflammatory, and you want to defer the automatic penalty process until the complaint has been dealt with

  • An immediately acceptable reasonable excuse is received, and you want to prevent the issue of automatic penalties before the receipt of the annual return is recorded on EBS

  • In a case where an employer return or return part received before 26 May 2005 has failed the quality standard checks and is being returned to the submitter for correction. For more information see subject ‘Correction of failed returns’ at PAYE40035

Permanent inhibition signal

This signal

  • Can only be set by the person nominated as an authorised officer

And

  • Is set on ECS

Setting this signal will result in the employer being permanently excluded from the penalty process.

This signal should be set in cases where ECS is unable to identify from information passed to it from EBS and NPS that the case is excluded from EOY penalties. For example

  • Employers with diplomatic immunity

  • Payment card reward schemes

Cases that have been permanently inhibited will not be included on the exception list that is created on ECS for further manual review.

Further details regarding the role of the penalty authorised officer can be found in the ECS First User Guide on the PTCPP Guidance Gateway.