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Where Taxpayers and Advisers Meet
RTI: Penalties for Late Real-Time PAYE Returns to be Postponed for ‘Smaller’ Employers
10/09/2014, by HM Revenue & Customs, Tax News - HMRC Administration, Practice and Methods
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While ‘larger’ Employers with 50 or more employees will still be caught by RTI late filing penalties from 6 October – now less than a month away – employers with fewer than 50 employees will now face automated in-year penalties from 6 March next year, gaining a few months’ extra grace.

HM Revenue and Customs (HMRC) will send electronic messages to all employers shortly to let them know when the penalties will apply to them, based on the number of employees shown in the department’s records.

In February HMRC announced a staggered start to the new, automated penalties for PAYE reported in real time -  HMRC Unveils New Timetable for RTI Penalties, detailing:

  1. April 2014 - in-year interest on any in-year payments not made by the due date
  2. October 2014 - automatic in-year late filing penalties
  3. April 2015 - automatic in-year late payment penalties

It is the second point which has now been extended for employers with fewer than 50 employees.

Note that ‘micro-employers’ with fewer than 10 employees still do not have to apply the “report on or before payment” rule until April 2016 – the package of help for micro-businesses still stands which means that they have only to report by the end of the last payday in each (tax) month.

The new in-year penalties will be issued quarterly, with the first penalty notice being issued early in 2015. They replace the end of year penalties, which apply up to the 2013-14 tax year. For more information on the new penalty regime, see -  What Happens if You Don’t Report Payroll Information on Time

HMRC will update its penalty guidance shortly. The new online appeals service and HMRC’s Generic Notification Service (GNS), which enables HMRC to send electronic messages to employers, are available within PAYE Online. Employers can read GNS with the PAYE Desktop Viewer.

Ruth Owen, HMRC Director-General for Personal Tax, said:

”Real Time Information is working well. Our most recent figures show that over 95% of PAYE schemes making payments to individuals are successfully reporting in real time, and 70% say that it is easy to do.

We know from our experience of rolling out of RTI that to ensure a smooth transition for our customers it’s best to introduce changes in stages. This will allow us to update our systems and enhance our guidance and customer support as needed. We know that those who have had most difficulty adjusting to real-time reporting have been small businesses, so this staged approach means they have a little more time to comply with the new arrangements before facing a penalty.

We believe this is the best approach for HMRC and our customers, as we all get used to the new in-year penalties.”

In the run up to March 2015, HMRC will examine other ways to encourage employers to comply with the rules, in addition to financial penalties.

Where employers believe they have a reasonable excuse for sending a return late, they will be able to appeal using HMRC’s new, online appeals process for automated penalties. This should speed up the appeal process for businesses and HMRC.

HMRC will issue end of year penalties for employers who it believes failed to send their final submission for 2013-14 on time later in September 2014.

About The Author

HM Revenue & Customs is the UK's primary taxing authority, responsible for the administration (and collection) of direct and indirect taxes and duties, and certain benefits.

For further information please visit the HMRC Website and in particular the About Us section.

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