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RTI Penalties - Do not ignore

In our October 2014 Newsletter we advised that small businesses would be exempt from Real Time Information (RTI) late filing penalties until March 2015.  Small businesses in this context are those that have 49 or fewer employees.

The penalty regime commenced on 6 March 2015 and penalties will be levied if:

  • Your full payment submission (FPS) is late
  • You do not send the expected number of FPSs
  • You do not submit an employer payment summary (EPS) when you do not pay an employee in a tax month

HMRC will not charge a penalty if:

  • Your FPS is late but all reported payments on the FPS are within 3 days of your employees' payday (this applies from 6 March 2015 to 5 April 2016)
  • You are a new employer and you sent your FPS within 30 days of paying an employee
  • It is your first failure in the tax year to send a report on time
  • You are an existing employer and have fewer than 10 employees and are taking advantage of the temporary reporting relaxation in which case penalties apply from 6 April 2016 (you must remember to use the late reporting code 'E')

The size of the monthly penalty depends upon the number of employees you have.

  • 1 to 9 employees - £100
  • 10 to 49 employees - £200
  • 50 to 249 employees - £300
  • 250 or more - £400
  • If you are over 3 months late you can be charged an additional penalty of 5% of the tax and NI that you should have been reported

To prevent incurring penalties you should:

  • Report PAYE on time by sending an FPS on or before the earliest payment date that is reported on it.
  • Make sure that, if you do need to report any payments late on an FPS, HMRC are notified of the reason why using the late reporting codes.
  • Send an EPS if you do not pay anyone in the month. An EPS can also be used to advise HMRC if there is going to be a period of inactivity and reports are not required for several months.    
  • If we are doing your payroll for you, ensure that we receive payroll information in good time to meet the reporting deadlines.
  • Tell HMRC if you have changed how often you pay your employees, for example changing from weekly to monthly.
  • Advise HMRC immediately if the PAYE scheme has ceased and you are no longer paying anyone.

It is anticipated that some penalty notices will be issued in error as has been the case when other penalty regimes have been established.  We will not receive copies of penalty notices that are issued and it is therefore important that you let us know if you receive one and provide us with a copy.  There is a mechanism to appeal against a penalty.                     

If we do not manage your payroll for you we recommend that you put systems in place to keep up to date with filing your EPS and FPSs.  You may also like to consider whether you would like us to manage your payroll for you in view of the level of the potential penalties.

If you wish to discuss this please do not hesitate to contact one of our directors or Carol Pennell our payroll administrator.

Details of the above can be found at this website