2013/14 is the first tax year in which the majority of employers have submitted their PAYE data using Real Time Information (RTI). Penalties for late RTI submissions made within the year have not yet been imposed by HMRC, but that is about to change.
There are two payroll actions which HMRC can issue late penalties for – late filing and late payment.
Late Filing Penalty
The late filing penalties that were due to be implemented by the Revenue from 6th April 2014 have now been revised and will come into effect from 6th October 2014. However, this is to give employers ‘more time to adapt to reporting in real time’.
So, when the penalties become effective:
Late filing penalties will apply on a monthly basis where payment information is not received via a Full Payment Summary (FPS) or when the Revenue have not been informed that no employees have been paid by sending an Employer Payment Summary (EPS).
The penalty regime for RTI will impose different levels of penalties depending on the size of the employer’s PAYE scheme. For late filing of RTI returns, the penalty system will use the following size bands:
- £100 penalty for schemes of 1 to 9 employees,
- £200 penalty for schemes of 10 – 49 employees,
- £300 for 50 – 249 employees and
- £400 for the biggest schemes with 250 or more employees.
Employers will be allowed one un-penalised default each tax year, unless they operate an annual PAYE scheme, in which case the late filing penalty will apply even if it is the first default.
Also, existing employers with nine or fewer employees will have an extension until April 2016, so that they can report PAYE information on or before the 5th of a calendar month.
The absolute RTI rule to avoid penalties is to make the submission ‘on or before the payroll payment date’.
Late Payment Penalty
Penalty charges for late monthly and quarterly PAYE payments are:
|No of defaults in a tax year||Penalty %||Amount to which penalty % applies|
|4-6||2%||From April 2014: the total amount that’s|
|7-8||3%||late in the relevant tax month (ignoring|
|10 or more||4%||the first late payment in the tax year)|
The first failure to pay on time does not count as a default.
As agents, it is our intention to submit payroll details under RTI as promptly as possible, and will continue to do so in the future.