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HMRC announces RTI penalty regime ‘guidance’

November 30, 2012


HM Revenue and Customs (HMRC) has formally published its guidance on penalties for late and inaccurate PAYE returns submitted in real time (RTI).

As anticipated, HMRC will not charge penalties for the late submission of employer in-year RTI internet returns, known as Full Payment Submissions (FPS), until April 2014. However, the current PAYE penalty regime which applies to late end of year submissions will continue to apply to the year end return for RTI, with a penalty being charged if the relevant information is not up to date by 19 May 2013.

Automated late payment penalties will now be introduced in April 2014. Six months after the introduction in April 2013 of RTI, HMRC will send automated letters to employers from October 2013 who are late submitting RTI returns to alert them that they would have been liable to a late filing penalty.

HMRC have also announced, that they will use real time information submissions to inform the collection of late payments from employers.

However, HMRC have announced that for inaccurate RTI returns they may charge penalties. In the 2012-13 tax year, these will not be charged for inaccuracies identified on in-year Full Payment Submissions, but penalties may be charged after the end of the tax year that ends in April 2013 as RTI launches, based on the final FPS for the year.

For the tax year 2013-14, the financial year which starts at the same time as RTI reporting in April 2013, HMRC have announced that they may charge ‘in-year’ penalties on inaccurate RTI FPS returns. In effect from the very start of RTI, if HMRC judges an employer has made inaccurate returns they may charge penalties.

HMRC will continue to use what it calls a “risk-based approach” to identify employers who it thinks may be submitting incorrect returns. In these circumstances HMRC will use the same criteria as now to decide whether a penalty should apply and if so, how much it should be. The current basis of inaccurate return penalty charges is laid down by Schedule 24 of the 2007 Finance Act.

Suzanne Newton, HMRC’s Programme Director for Real Time Information, said: “After stakeholder consultation, we have published our guidance on late and inaccurate returns sent in real time. This will give most employers a year to get used to reporting in real time before implementing the new penalties.”

She commented that since the expansion of its employer RTI pilot in November, which first started in April 2012, HMRC now has PAYE information for over 2.1 million individual records successfully reported in real time from more than 15,000 PAYE schemes.

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