End of tax year and avoiding penalties

It is that time of year again when businesses have to start preparing their Employer Annual Returns which are due to HMRC by 19 May, says the CIPP’s Diana Bruce.

This task can never be looked upon lightly as failure to adhere to the rules could result in hefty penalties. Of course there is a lot more than filing returns involved at the end of and after the tax year, and these duties can just as easily incur penalties if reasonable care is not taken. Penalties are charged for a variety of reasons, including incorrect returns, late returns, late PAYE payments and a failure to file online where mandatory.

Employer Annual Returns

Continued...

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Comments
TomMcClelland's picture

Very useful, but one slight error... I think.

TomMcClelland | | Permalink

"And there are also certain groups that must file on paper. Employers and certain employees who have special arrangements with HMRC for the direct collection of PAYE tax and/or National Insurance and employers whose business is a limited company and the only information you’re submitting is an entry in Box 28 ('CIS deductions suffered') of form P35 relating to payments received for work in the construction industry"

 

HMRC fixed this a couple of years ago. An employer with solely CIS Deductions suffered and no P14s at all and no CIS subcontractor deductions can file by internet. To verify my memory of this I just did a test submission of that situation and it would have been accepted if it had been a live submission.

RTI

geraldw | | Permalink

I fail to see any benefit from this for small businesses who might even be still using paper P11s  for their payroll. Does it mean that EVERY employer will have to use payoll software in order to file online every week / month. Another task many businesses could without. Can it be done using HMRC PAYE basic tools ?

The cynic in me can only see this as another money making scheme for the government. Much like CIS returns which were switched from annual to monthly to boost the treasury coffers.

TomMcClelland's picture

Basic PAYE tools yes, manual payrolls no, I think

TomMcClelland | | Permalink

geraldw wrote:

I fail to see any benefit from this for small businesses who might even be still using paper P11s  for their payroll. Does it mean that EVERY employer will have to use payoll software in order to file online every week / month. Another task many businesses could without. Can it be done using HMRC PAYE basic tools ?

The cynic in me can only see this as another money making scheme for the government. Much like CIS returns which were switched from annual to monthly to boost the treasury coffers.

 

I believe that they'll allow RTI to be done with Basic PAYE tools (only free at the point of use of course; they didn't fall from heaven. We're all paying for that piece of software, and per employer the cost is quite high when you add in HMRC's vast advertising budget for that product in terms of glossy promos mailed to every employer in the land)

But I think manual payrolls will have to be a thing of the past once RTI is compulsory.

thepayrollsite's picture

RTI, small businesses and PAYE basic tools

thepayrollsite | | Permalink

geraldw wrote:

I fail to see any benefit from this for small businesses who might even be still using paper P11s  for their payroll. Does it mean that EVERY employer will have to use payoll software in order to file online every week / month. Another task many businesses could without. Can it be done using HMRC PAYE basic tools ?

The cynic in me can only see this as another money making scheme for the government. Much like CIS returns which were switched from annual to monthly to boost the treasury coffers.

 

HMRC estimate that switching to RTI will save employers about £300 million per year in the long term, mostly from small businesses.  I think HMRC's figures are lunacy, and RTI will cost businesses extra every year, not save them money.

 

RTI facilities have been added to the Basic PAYE Tools, but I understand the pre-release version with the new features still needs some work before it is ready for use.

 

TomMcClelland's picture

Indeed

TomMcClelland | | Permalink

thepayrollsite wrote:

HMRC estimate that switching to RTI will save employers about £300 million per year in the long term, mostly from small businesses.  I think HMRC's figures are lunacy, and RTI will cost businesses extra every year, not save them money.

 

RTI facilities have been added to the Basic PAYE Tools, but I understand the pre-release version with the new features still needs some work before it is ready for use.

 

As a commentator at one of HMRC's developer consultation meetings put it, "HMRC is relieving employers of the irksome burden of annual P35/P14 reporting by making them file an equivalent return every time they do a payroll run..."

DMGbus's picture

Extra costs for very small businesses

DMGbus | | Permalink

Here's what HMRC admit to:

 " HMRC's initial assessment of the new ongoing administrative burden is approximately £30 million per year in steady state. It is acknowledged that some employers who operate PAYE will face an additional cost because under RTI they will need to report payments made to all of their employees, including those paid below the National Insurance contributions Lower Earnings Limit. HMRC does not hold the data needed to estimate this cost. "

So, a small business only using weekly paid employees paid below the NIC LEL (and forms P46 held to certify no other job) will now have to register for PAYE and submit 52 reports to HMRC a year instead of nil.   52 new opportunities for HMRC to levy a fine a year.  Extra work for the employer.  Extra cost for the employer as "time is money".    Having said all this HMRC have come up with a spurious unproven statement that £330 million a year will be saved by business as a result of RTI as they no longer will need to file forms P45 and P46 with HMRC.

If anyone can offer to make 52 RTI reports a year for a small business for free, then please step forward and say so here.  Alternatively please give an idea as to the cost as HMRC hasn't got a clue.

Whoever within HMRC has given the misleading information that RTI will save businesses money should step forward, be named, and be sued by every small business that incurs extra costs as a result of their (at best) mis-statement or (maybe) mis-representation.   Would be great to see a class action taken by hundreds of small businesses against people within HMRC who are so out of touch with the reality of small business.   It won't happen, within the public sector people who are totally incompetent retain their jobs for life, or so it seems (but maybe if their misjudgments result in deaths then they'll be dismissed and then the dismissed incompetents sue for unfair dismissal - or so it seems).

 

 

 

TomMcClelland's picture

The same research that concluded...

TomMcClelland | | Permalink

The same HMRC research that apparently concluded that 90% of employees are paid by BACS.

I hope that they didn't pay the consultants for that particular piece of research.

its a bit like the £100 penalty charged to

justsotax | | Permalink

new business who failed to notify the revenue within 3 months that they had commenced - apparently this was to 'help' businesses.

 

I wonder one day whether these guys will actually listen to those who run businesses....and I don't mean those at the top but those on the ground, sole traders with 1-2 employees.

mr. mischief's picture

Another fiasco looms    1 thanks

mr. mischief | | Permalink

is there a single accountant or payroll manager in the UK who believes HMRC have anything close to the necessary skills and experience to pull off RTI without the most Almighty shambles?

TomMcClelland's picture

It depends if they heed the pilot lessons

TomMcClelland | | Permalink

mr. mischief wrote:

is there a single accountant or payroll manager in the UK who believes HMRC have anything close to the necessary skills and experience to pull off RTI without the most Almighty shambles?

 

The only thing that gives me a little confidence that there is some chance of getting it right is the fairly sizable pilot that they're conducting this year.

Clearly the pilot should start with MPs salaries and HMRC's own internal payroll system (with no-one being paid if the RTI return fails). Then extended to other government departments. Once they're all functioning smoothly the scheme should be extended to large private employers then all other employers. I wonder if that is what they'll do...

The sharp-end IT people I speak to at HMRC (eg in the SDS department) seem very switched on. I'm not sure that communication from the upper echelons is really a proper 2 way street though.

P38a late filing penalty

ChengWong | | Permalink

Any idea if there is a penalty for late filing of P38a ?