I had a similar problem with an employee we had on Hold.  Every time I included him it wanted a reason he was late.

The problem stemmed from not including him on the first FPS at the start of the tax year (as on hold) - he had no "last FPS" date.  I think I finally solved the problem by not including him until the first FPS of a new tax year; then I was able to make him a leaver and clear him out.

I had a similar problem with an employee we had on Hold.  Every time I included him it wanted a reason he was late.

The problem stemmed from not including him on the first FPS at the start of the tax year (as on hold) - he had no "last FPS" date.  I think I finally solved the problem by not including him until the first FPS of a new tax year; then I was able to make him a leaver and clear him out.

Sounds the same - how did you not include him if already marked as a leaver so automatically picked up?

When I took over doing the payroll, he was on hold but had not been included in any FPS of that tax year.  Trying to send an FPS always wanted a reason it was late, so I didn't bother.  I guessed that perhaps I could include him on the first FPS as everyone is effectively reset for tax/NI purposes - joiners are noted as the year progresses (probably by their start date).

For an FPS I have to select whom to send: I usually select everyone except Current Leavers who are not leavers of the payroll run and Historic Leavers; if someone is newly On Hold they are included otherwise automagically deselected.  He was included but caused it to want a late reason; manually unselecting him so he wasn't included and the late reason request disappeared.

For some reason, as it was a later tax period than the start of the year, as he hadn't been paid nor included on a previous FPS (this tax year) nor noted as a starter, someone decided that HMRC would consider this was a late notification of some kind.

By including him on the first FPS of the tax year HMRC had him noted as On Hold in our payroll; I could then mark him as a leaver later and the FPS was not noted as wanting a reason for being "late".

Have you successfully sent the FPS with him as a leaver (giving a reason each time), or have you just deselected him to avoid the late reason request?  If you look at the data of your FPS e-submissions does it show him being marked as a leaver each time?

It may be worthwhile talking with HMRC to clarify what you need to do, particularly if you're giving a late reason every time you include him.

[You could stop including him, remove his leave date, mark him as On Hold, wait until April 2024, include him in the first FPS of tax year 24/25, then give a leave date at the second payroll run, include him then and the late reason request may disappear.  BUT if you have been including him in the sent FPSs with a late reason I would talk to HMRC first.]

I don't seem to have a choice in who gets included in an FPS. But, thanks for this, most helpful. Guess Id better talk to HMRC.... Thanks for your time.