RTI Simple(?) Question

RTI Simple(?) Question

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When the penalty regime eventually arrives how will HMRC treat the following

Client fails to file RTI ontime because:-

Bookkeeper ill, on holiday or left suddenly

Will there be  some form of "sympathy and understanding" or just a penalty?

Replies (11)

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By rjoconnor81
24th Feb 2014 09:52

You get the first one free, and then there are a list of reasonable excuses.  I can't seem to find the list of reasonable excuses, but I know one of them is internet issues.  I am not sure about illness etc.

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Stepurhan
By stepurhan
24th Feb 2014 10:14

Backup plan

Just out of curiosity, what backup plan do you now have in place for these eventualities? It seems to me that your employees will still want to get paid. How do you make sure that happens if your book-keeper falls ill/goes on holiday/leaves?

Incidentally, I don't think "the person that normally deals with it is on holiday" is likely to be accepted as an excuse for any penalty. Unlike the other two examples, holidays can be planned for.

EDIT: Not comprehensive, but some indications of what will and won't be considered a reasonable excuse on the HMRC website. I would say that reliance on another not being a reasonable excuse would exclude all of your book-keeper scenarios. http://www.hmrc.gov.uk/payerti/reporting/late-reporting.htm#4

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By onicholson
24th Feb 2014 10:10

Reasonable excuse
HMRC never enumerate all the cases they do or don't consider reasonable but you can find a few here:
http://www.hmrc.gov.uk/payerti/reporting/late-reporting.htm

They also have general guidance here:
http://www.hmrc.gov.uk/online/excuse-missed-deadline.htm

As a guideline, if it can be predicted, it's not a reasonable excuse. If your book-keeper is ill, the first week or two may be reasonable; 2 months of illness later, it's less reasonable.

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By bernard michael
24th Feb 2014 10:11

We have 3 people who can operate the payroll if necessary. It was just a hypothetical question and based on a lot of clients who rely on just one person for bookkeeping and payroll

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Replying to NH:
Stepurhan
By stepurhan
24th Feb 2014 10:18

Then what do THEY do?

bernard michael wrote:
We have 3 people who can operate the payroll if necessary. It was just a hypothetical question and based on a lot of clients who rely on just one person for bookkeeping and payroll.
A lot of people say that having the one person knowing how to do payroll being absent (for whatever reason) is a reason for an RTI report being filed. My question, asked repeatedly but never answered, is what do these businesses do about net pay in these circumstances? Employees still expect to be paid regularly. A business that does not have a backup plan to make sure they do get paid is going to have a lot bigger problems than a single RTI penalty.

If there is a backup plan where the net pay is calculated properly, is it really that hard to get the RTI report filed as well?

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By bernard michael
24th Feb 2014 10:25

In my experience most small companies faced with the problem just pay the same as last week/month and wait for the resolution of the problem to sort out the correct figures. All that has now changed is the advent of RTI and the possible penalties

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Replying to Tax Dragon:
Stepurhan
By stepurhan
24th Feb 2014 10:48

Risky strategy

bernard michael wrote:
In my experience most small companies faced with the problem just pay the same as last week/month and wait for the resolution of the problem to sort out the correct figures. All that has now changed is the advent of RTI and the possible penalties

Employees have variable hours - net pay will be wrong. Employee who worked 25 hours last month and 50 this will feel rightfully aggrieved.

Employees work overtime - net pay will be wrong. Employee who worked overtime to keep a customer happy, and hence keep them as a customer for the business will feel rightfully aggrieved.

Employee has change of tax code - net pay will be wrong. Employee who has queried an incorrect code (Say, the common problem of coding out rental income even though that is dealt with through SA and the tax return explicitly said "Don't collect through PAYE") rightfully aggrieved that getting their overpaid tax back will take another month.

OK, if employees are salaried using the same net pay figure MIGHT be correct. Rather a risk to take with common scenarios for small businesses though.

That is also ignoring the fact that simply making payment to employees without calculating tax and NIC correctly is legally wrong. If you employ someone then you must operate payments to them through PAYE. This is not a new RTI requirement, but the law going back many years. Calling ignoring this requirement, "standard business practice" or "just the way businesses operate in the real world" is no excuse. It is common practice for people to exceed the speed limit. That doesn't make exceeding the speed limit right.

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By daveforbes
24th Feb 2014 10:32

... and remember to include it in RTI submission.

From April the RTI submission contains a field to report why you are late.

 

A – Notional payment: Payment to Expat by third party or overseas employer

B – Notional payment: Employment related security

C – Notional payment: Other

D – Payment subject to Class 1 NICs but P11D/P9D for tax

E – Micro Employer using temporary "on or before" relaxation

F – No requirement to maintain a Deductions Working Sheet or Impractical to report work done on the day

G – Reasonable excuse

H – Correction to earlier submission

So you will need to make sure this is set to "G".

This field is actually per payment, so for a large payroll you could potentially have many different reasons in the same transmission .... and play a tune.

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By bernard michael
24th Feb 2014 10:42

Thanks to you all

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By dnicholson
24th Feb 2014 11:11

Re: Pay the same
Well if it comes to payday and the wages aren't calculated you could tell the staff that their pay may be wrong so you aren't going to pay them, or you could tell them that you'll pay them what they got last time and correct it in the following payroll. I know which I'd choose, and the consequences of a wrong choice would probably be bigger than whatever HMRC may do.

Of course I'm assuming that it does get corrected and that it's rare. By which I don't mean events like holidays.

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By DMGbus
24th Feb 2014 11:51

Monthly instead of weekly

This has been said before, but is worth re-iterating.

A monthly payroll has 12 chances of FPS non-compliance in a year.

A weekly payroll has 52 chances of FPS non-compliance in a year.

The annual costs of running monthly payroll FPS filing is only a fraction of running a weekly payroll. (Costs: either employer admin time or professional fees for a 3rd party running the payroll).

A monthly payroll FPS can be filed several weeks in advance (ie. just before payroll clerk goes on holiday).

At the end of the day it is the employer's choice as to monthly or weekly payment of wages.  The employer has to take on board the points made above.   Payroll bureau / accountants also need to gear themselves upto to client requirements.   Payroll bureau / accountants need to make a decision on the matter of weekly payrolls - quote an appropriately high level of fees for weekly or recommend clients to a bookkeeper happy to run weekly payrolls at lower cost.

Weekly based payrolls require at least two available people with payroll expertise to cover for absence.   This puts the one man band accountant / payroll bureau / bookkeepers at a disadvantage.

 

 

 

 

 

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