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To deal with the receipt of a NICs Settlement Return (NSR) follow steps 1 - 16 below. The Guide is presented as follows

Steps 1 - 5

Initial action

Steps 6 - 8

The NSR shows an additional amount of NIC due

Steps 9 - 15

The NSR shows a refund of NICs

Step 16

The NSR balances or is a nil return

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Initial action

On receipt of an NSR

1. Ensure a P35 has been received under the employer’s main PAYE reference

2. Process any payment in accordance with PAYE50015

3. Use the e-Filestore to check that the submitted with the P35 under the employer’s main PAYE reference

4. Is there a discrepancy at step 3?

• If yes, go to step 5
• If no
  • Go to step 6 if the NSR shows an additional amount of NIC due
  • Go to step 9 if the NSR shows a refund of NICs
  • Go to step 16 if the NSR balances or is a nil return

5. Return the NSR to the employer asking to explain the discrepancy

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The NSR shows an additional amount of NIC due

6. Is the amount entered in Column E of the NSR greater than zero?

• If yes, go to step 7
• If no, go to step 8

7. Process the ‘Total NIC settlement amount� shown on the NSR under the EP Appendix 7B employer reference

8. Take the following action

• Process the ‘Total NIC settlement amountâ€� shown on the NSR under the EP Appendix 7B employer reference
• Send a copy of the NSR to NICO (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
• Issue to the employer or employer’s representative

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The NSR shows a refund of NICs

9. Is the refund of Class 1 secondary and / or primary NICs on earnings above the UEL?

• If yes, go to step 10
• If no, go to step 13

10. Is the refund due to the employer because

• The NICs was paid by the employer under social security equalisation and without recovery from the employee, or
• They are supported by mandates authorising refunds to be made to the employer?
  • If yes, go to step 11
  • If no, go to step 12

11. Take the following action

• Process the NSR as an additional complete P35 at Return Status Indicator (RSI) 2 with 0 (zero) forms P14 under the employer’s main PAYE employer reference
• Use either EBS function Cancel One Year Only (COYO) or Amend Employer Indicators to set COYO indicator on the EP Appendix 7B employer reference

12. Take the following action

• Send a copy of the NSR to NICO to make the refund(s) to the employee(s) (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
• Process the NSR as an additional complete P35 at Return Status Indicator (RSI) 2 with 0 (zero) forms P14 under the employer’s main PAYE reference to refund to the employer the secondary NICs shown on column M
• Use either EBS function Cancel One Year Only (COYO) or Amend Employer Indicators to set COYO indicator on the EP Appendix 7B employer reference
• Issue to the employer or employer’s representative

13. Is the refund of primary NICs between the LEL and UEL and above the UEL due to the employer because

• The NICs was paid by the employer under social security equalisation and without recovery from the employee, or
• They are supported by mandates authorising s to be made to the employer?
  • If yes, go to step 14
  • If no, go to step 15

14. Take the following action

• Process the NIC refund shown on the NSR under the employer’s main PAYE reference
• Use either EBS function Cancel One Year Only (COYO) or Amend Employer Indicators to set COYO indicator on the EP Appendix 7B employer reference
• Pass a copy of the NSR to NICO to update the employees NIC record (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
• Issue to the employer or employer’s representative

15. Take the following action

• Pass a copy of the NSR to NICO to make the refunds to the employees (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
• Process the NSR as an additional complete P35 at Return Status Indicator (RSI) 2 with 0 (zero) forms P14 under the employer’s main PAYE reference to refund to the employer the secondary NICs shown on column M
• Use either EBS function Cancel One Year Only (COYO) or Amend Employer Indicators to set COYO indicator on the EP Appendix 7B employer reference
• Issue to the employer or employer’s representative

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The NSR balances or is a nil return

16. Take the following action

• Use either EBS function Cancel One Year Only (COYO) or Amend Employer Indicators to set COYO indicator on the EP Appendix 7B employer reference
• If the NSR shows the primary NICs between the LEL and UEL has altered for any of the employees send a copy of it to NICO to update the employees NIC record (This content has been withheld because of exemptions in the Freedom of Information Act 2000)

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