The outcome depends on whether the Cancel Payment was done with the PAYE Modernisation Deletion option enabled or not:
PAYE Modernisation Deletion option enabled: A delete line item is written out to the Payroll Submission file for the current period.
PAYE Modernisation Deletion option disabled: The cancelled values are netted off in the Payroll Submission file for the current period.
Check what happens if you do not tick the recoup indicator.