Penalties for Late Filing Start

     HMRC’s penalty regime for late filing of the Full Payment Submission (FPS) has started and will apply to the following (all of which HMRC’s systems will deem that the FPS has been filed late):

• The FPS has not been filed on or before any of the Payment Dates in the submission, and the employer not advised HMRC why it was late (i.e. by using the Late Reporting Reason field)
• HMRC have not received the number of submission that they were expecting to receive, based upon the employees’ pay frequency
• The employer has not filed a NIL Employer Payment Summary (EPS) advising that there were no payments made in the tax Month (i.e. understandably, without the NIL EPS, HMRC’s systems will assume that the employer has not filed a FPS that they should have filed)

As we have reported, there will be a phased implementation of the late filing penalties as follows:

• For FPSs due on or after 06 October 2014 where the existing PAYE scheme has 50 or more employees
• For FPSs due on or after 06 March 2015 where the PAYE scheme has:
  • 49 or fewer employees and
  • For new PAYE schemes where HMRC issues the PAYE reference number after 06 October 2014

The following points are highly worth noting:

• There will be one unpenalised default allowed in each tax year. However, this will not apply to the PAYE schemes that enter the penalty regime from March 2015.  This ensures that there is a penalty regime in place for all employers in the 2014/15 tax year
• New employers will not be penalised if their FPS is received within 30 days of making their first payment to an employee
• Each PAYE scheme will be subject to only one monthly late filing penalty each tax Month. This is regardless of the number of FPSs that were actually due to be submitted in that tax Month.  For example, assuming that the unpenalised default has passed, a weekly PAYE scheme that fails to submit 4 weekly FPSs on time will be subject to one late filing penalty (just as a monthly payroll failing to submit on time will be subject to one late filing penalty)
• Penalties apply to each PAYE scheme and the size of the penalty varies in accordance with the number of employees in the scheme. The result is that different penalties will apply depending on the size of the PAYE scheme:

Employers should already be aware that they are due to receive a Penalty Notice, as the Generic Notification Service (GNS) should have issued a notification of apparent late / non-filing.  The actual Notice will be issued quarterly in July, October, January and April; therefore, the first ones will be issued at the end of January 2015 (for the tax quarter running 06 October to 05 January).  Penalties must be paid within 30 days following the date on the Penalty Notice.  Late payments of penalties will attract interest

From late in 2014, HMRC are introducing an online appeals service that employers can use of they believe that a penalty has been issued incorrectly.  This will be available through PAYE Online and we will publish more information when this is available.

CommentHere are some tips on avoiding the late filing penalty regime: Ensure that all FPSs are filed on or before the Payment Date that is declared in the FPS. Therefore, ensure you are aware how your software populates this vital RTI field If the FPS is filed justifiably late, employers should tell HMRC the reason for the late filing via the Late Reporting Reason field If there are no FPSs to be sent in the tax Month, ensure that a NIL EPS is sent, advising HMRC that there is no activity on the PAYE scheme. This must be sent by the 19th of the following tax Month Ensure that you can access the PAYE Desktop Viewer (via PAYE Online of payroll software): to receive Generic Notification Service (GNS) messages to view your PAYE scheme liabilities and payments to access the online penalties appeals service (later in 2014)

Further information

• Gov.UK – What happens if you don’t report payroll information on time
• Payroll Help 17 September 2014 – Penalties for Late RTI Returns
• Payroll Help 04 March 2014 – RTI and the Payment Date
• Payroll Help 14 January 2014 – RTI and the Late Reporting Reason
• Gov.UK  – The Employer Payment Summary: What to report