Sunday, 8 March 2015

Important News for employers and potental PAYE penalties

Automatic in-year penalties for late RTI reports have been in place for employers with 50 or more staff since October 2014. Starting from 6 March 2015 they will also apply for those with fewer workers. The one exception is employers with fewer than ten on their payroll; in-year penalties won't apply to them until April 2016 although it is still worth a note in your diary.

HMRC is about to start sending out penalty notices to employers in the 50 plus employees category who have submitted two or more late RTI full payment submissions (FPSs) since October 2014.

For second and subsequent late FPSs, the penalty charge is a minimum of £100 and a maximum of £400 depending on the number of employees. Plus, where a report is made more than three months late, a further fine equal to 5% of the PAYE/CIS tax and NI due on the report is payable.

If you receive notice of a penalty that you think isn't due, for example, if an RTI report wasn't required for the period in question, you can appeal against it. The easiest and quickest way to do this is to use HMRC's online penalty and appeals service.

Penalty notices will be sent automatically if HMRC's computer thinks an RTI report is late or has been missed. For this reason I expect to see a wave of incorrect notices following the end of each tax month. While you can appeal against an incorrect notice, it's better to avoid the hassle in the first place.

Even if you make no payments of salary etc. for a tax month, HMRC's system assumes that an FPS is required unless you tell it that there's nothing to declare. To avoid a penalty notice submit an employer payment summary as soon as you know an FPS is not needed.

Penalty notices will be issued in March 2015 to employers with 50 or more employees who have made two or more lates FPSs. Plus, the penalty rules will start to apply for employees with ten or more workers.

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