From 6 March 2015, all employers may incur a penalty for each tax month in which one or more real-time PAYE reports for a scheme are late.
Although HMRCHMRC do not usually charge a penalty for the first month in each tax year where you make a late report, this doesn’t apply to late reports for 6 March to 5 April 2015 (tax month 12) for schemes with fewer than 50 employees: it will only apply from 6 April 2015 onwards. These schemes will incur a penalty if they file late, or not at all, for Month 12 as this is the only period in the year for which penalties apply to them.
Top tips on how to avoid incurring penalties unnecessarily
Report PAYE on time by sending a Full Payment Submission (FPS) on or before the earliest payment date that is reported on it.
Remember in particular that all reports for 2014-15 tax month 12 must be returned by the same deadlines as for rest of the year: the filing deadline of 19 May following the end of the tax year no longer applies.
If you are sending your submission after any of the payment dates reported on it make sure you use the late reporting reason code if appropriate. For example, if an FPS needs to be resubmitted because of an IT difficulty, check whether any of the reported payments no longer meet the ‘on or before’ obligation and, if so, consider claiming ‘reasonable excuse’ in the associated Late Reporting Reason field. You might need also need to use the late reporting reason code even if you have reported everything on time, but the FPS is sent after the payment date, for example because you are making a correction, or are a small or micro employer who is taking advantage of the easement to report monthly.
Send an Employer Payment Summary (EPS) by 19th of the month if:
– you don’t pay anyone during the tax month.
– you are going to have a period of inactivity and won’t be reporting for several months even if you have submitted a final FPS earlier in the year
If you use a payroll services provider or an agent to run your payroll, get your payroll information to them in good time to meet the reporting deadlines
Tell HMRC if there are any changes to your business or your payroll practices which mean that HMRC will not receive the reports HMRC would otherwise have been expecting, for instance:
– you change the number of payrolls or how often you pay you employees, for example changing from weekly to monthly
– the PAYE scheme has now ceased and you are no longer paying anyone
Penalty notices and appeals
HMRC will issue notices in late May 2015 for penalties incurred:
– between 6 January and 5 April 2015 by schemes with 50 or more employees
– between 6 March and 5 April by schemes with 49 or fewer employees.
Penalties can be between £100 and £400 per month depending on the number of employees in the scheme.
Appeals can be made online or in writing, and will be considered in exactly the same way, whichever method you use. However, HMRC will be able to process your appeal more quickly if you make it online. Appeals can only be made once a penalty notice has been issued, and cannot be made by telephone.
Further late filing penalties
Where an FPS is outstanding for three months or more HMRC may charge a further penalty of 5% of the tax/NICs that would have been paid if the information it provides had been sent on time. HMRC will only apply this penalty for the most serious and persistent failures.
For more information or to outsource your payroll contact Livignstones Accountants on (020) 8903 9538.