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HMRC flags how to avoid a late filing penalty

June 23, 2014

 

HMRC has published a fact sheet for employers on in-year RTI late filing penalties which will come into effect from the 6th of October this year. The guidance encourages employers to ensure they are up to date with all PAYE submissions by the fifth of October in order to avoid a penalty.  HMRC also say they are using the Generic Notification Service to help employers get their PAYE submissions up to date, highlighting the importance of employers paying attention to GNS messages regarding late and non-filed RTI submissions in order to avoid penalties.

The ‘At a glance’ document confirms the conditions under which a penalty will be issued: if an employer has not submitted the expected number of RTI returns, sent a Full Payment Submission on or before the date they paid their employees or used the late reporting reason field to inform HMRC why a return is late then a late filing penalty will be issued.  Employers must remember to send in a nil EPS if they have not paid any employees in a tax month by the 19th of the month following or HMRC systems will assume the employer has not submitted the correct number of returns and a non-filing penalty will be issued.  The number of submissions expected is based on the PAYE scheme, so if an employer is operating more than one PAYE scheme it is important that all submissions for all schemes are up to date.

Penalties will be notified in writing to employers in July, October, January and April (where incurred).  The penalty notice will give details of the amount of the penalty for each tax month, how to pay the penalty and what to do if they don’t agree with the penalty.  The first default of the tax year will not penalised, and employers who file weekly will only receive one penalty per month, even if there is more than one default in the month.  New employers will get a thirty day grace period in which to file after the first time they pay their employees, however after this they must file on or before they pay their employees.

The guidance also reminds employers that from October they can use HMRC’s online appeals tool if they disagree with a penalty.  If employers think that a penalty is not due, is wrong or they had a reasonable excuse for filing late, they will be able to appeal a penalty, however HMRC may not necessarily agree with the employer on what constitutes a reasonable excuse.  Further information is available from HMRC on what they consider to be a reasonable excuse.  HMRC may be able to settle some appeals automatically where employers use the new online tool.  If the appeal can be settled in this way, HMRC will use the Generic Notification Service to inform the employer their appeal has been successful.  As in previous years, appeals in writing will be accepted, but it should be noted that these may take longer to process than online appeals.

Kate Upcraft, payroll expert and member of the original Customer User Group, who heads the accounting representative bodies Task Force which works with HMRC on RTI issues, commented on the factsheet in her blog, saying that care must be taken over the definition of the date of payment.  Upcraft points out that HMRC guidance on pay days which fall on non-banking days makes it clear that the date of payment which should be reported on the FPS is the pay date as set out in the contract:

Please note that it is incorrect that HMRC refer to the FPS having to [be] sent ‘on or before the date you pay them’.  The ‘date of payment’ in the FPS should always be the contractual pay date which could be a Saturday or Sunday or a bank holiday, not the day that employees are paid which may be the closest banking day to that weekend contractual pay date.

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