Under Real Time Information (RTI) employers are required to submit payroll information to HMRC in real time, this became compulsory for most employers on 5 April 2013.

Late filing

HMRC decided not to enforce the penalties that were in place whilst employers bedded down under the new regime. This was until an announcement made in September 2014, which provided an update regarding the start date for automated in-year penalties, as the table shows:

 

Date	Monthly penalty
6 October 2014	50 + employees in a PAYE scheme.
6 March 2015	For small employers with fewer than 50 employees.
6 April 2016	Employers with fewer than ten employees who use the relaxed reporting requirement.

 

RTI late filing penalties – on or after 6 October 2014

 

Number of employees	Monthly penalty
1-9	£100
10-49	£200
50-249	£300
250 +	£400

 

Penalties – key points to remember

• The size of the penalty is based on the number of employees in the scheme;
• Filing defaults will apply each month and will depend on returns not being received;
• There will be one un-penalised default each year, with all subsequent defaults attracting a penalty, this applies to FPS and EPS submissions;
• Penalties will be charged quarterly, subject to the usual reasonable excuse and appeal provisions;
• An additional tax-geared penalty may be applied if a return is outstanding for three months or more;

Penalties will be ‘ring-fenced’ so that if further defaults arise earlier penalties do not have to be recalculated

Late payment

In addition to the late filing penalties, from April 2015 additional charges on late payment of PAYE and NIC will be enforced for all employers on a ‘pay period by pay period’ basis. Where payments are not made by 22^nd of the following month (19^th for cheque payment). The first instance of a late payment in a tax year will not incur a penalty, but for subsequent late payment the following penalties will be imposed:


 

Number of late payments	% of PAYE/NIC as penalty
1-3	1%
4-6	2%
7-9	3%
10 +	4%

 

Further penalties of 5% will also arise if the PAYE/NIC is more than six months late and again at 12 months. As before, the legislation here has been in place for some time but previously only applied to larger employers.

 

Appeal process

• An employer may appeal against RTI penalties, subject to a 30 day time limit


• The appeal can be on paper or using the new online process from April 2015 and details of how to appeal will be attached to the penalty notices


• Reasonable excuses:
  
  
  • fire/flood/natural disaster;
  
  
  • death/bereavement (key employee of close relative);
  
  
  • ill Health;
  
  
  • theft/Crime;
  
  
  • IT difficulty. 

If you have any queries on any of the issues raised in this article or any other aspect of payroll compliance, please speak to a member of our Employers’ Support group.