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Penalty Concessions
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RTI penalty concession to stay

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31st May 2016
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HMRC has been tardy in telling us about its position on RTI late filing penalties, but now we know.

HMRC has provided a soft landing for late filing penalties for full payment submissions (FPS) under RTI since 2014/15, but that was due to end on 5 April 2016. On that date we specifically asked HMRC for guidance on the revised RTI penalty position, but we heard nothing. Now, a full seven weeks into the 2016/17 tax year, HMRC has announced that the late filing penalty soft landing will be extended to April 2017.

The fully automatic late filing penalty regime for RTI was supposed to come into force from 6 October 2014 for employers with 50 or more employees, and from 6 March 2015 for all other employers. In fact the automatic function was disconnected, and HMRC decided to risk assess the issue of all RTI late filing penalties.

HMRC will continue with this risk-based approach until at least 5 April 2017. This means that only employers who have persistently filed their FPS late for several months will be issued with a penalty – which can be appealed.

A second strand to this softly softly approach was to ignore all late filing of FPS made within three days of the payment date (i.e. the date employees are contractually entitled to the pay). This three-day grace period was introduced for FPS returns due on and after 6 March 2015, and that too has been extended to all FPS due before 6 April 2017.

However, HMRC say that employers who regularly file late within the three-day grace period will be monitored and may be contacted with a warning that a penalty could apply. Note that the grace period doesn’t give the employer any legal protection, as it is only a HMRC concession – it’s not written into law.

From April 2017 we are expecting the format of all late filing penalties to be reformed, as HMRC consulted on the broad structure of penalties last year. HMRC say they want to concentrate on taxpayers who deliberately and persistently fail to meet statutory deadlines, rather than those who make occasional and genuine errors for which other responses might be more appropriate.          

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the sea otter
By memyself-eye
31st May 2016 10:39

A small glimmer of common sense from HMRC? I'm almost grateful.

Thanks (1)
Tornado
By Tornado
31st May 2016 18:33

As scathing as I usually am when it comes to HMRC, this is a fair and sensible approach to dealing with compliance. The more unreasonable you are, the more folks will dig their heels in but a more pragmatic approach to the problem of compliance, the better the compliance becomes. Unreasonable fines and penalties do not work in the long run, co-operation and reasonableness does.

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joe
By Smokoe Joe
01st Jun 2016 10:19

Just as well, as HMRC fail a myriad times everyday to operate RTI correctly themselves so fining employers would display arrogant temerity.
Case in point, my admin assistant is employed above the PA level. She has been doing a short-term stint of additional work elsewhere alongside her days with me. She correctly completed the P46 (I helped her) yet she now has had her tax code split between to two employments? Why, they have been sent no filing to say the primary employment has ceased and the P46 clearly showed this was a secondary income, which is acknowledged on the coding notice! Why not simply use BR for the second employment in accordance with procedure?

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Replying to Smokoe Joe:
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By daveforbes
01st Jun 2016 10:52

I thought P46s were a thing of the past ... https://www.gov.uk/government/collections/paye-forms

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Replying to daveforbes:
joe
By Smokoe Joe
01st Jun 2016 13:47

Still got the old duplicate response problem then!

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Replying to daveforbes:
joe
By Smokoe Joe
01st Jun 2016 13:44

A rose ...

P46 or starter checklist - what's in a name?

Thanks (1)
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By jkd
01st Jun 2016 10:59

How does one appeal against a £50 penalty?

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By Charlie Carne
01st Jun 2016 12:21

This is most certainly welcome news and suggests that HMRC recognise some of the problems inherent in RTI. But why oh why does it take HMRC so long to update their own records after the filing of the FPS? Here are their published timings for updates to their records following submission of reports or making payments:

Type of report ---- When it will show here
Payment ---- After 6 working days
FPS ---- From the 12th of the next tax month
Late FPS ---- See GOV.UK guide on payroll
EPS ---- Within 2 days
EPS sent before 11th ---- By the 14th of that month

If this truly were a Real Time Information (RTI) system, they would show up immediately. Instead, taxpayers and their agents have to operate in real time, whilst HMRC operate on a "whenever we can be bothered to get around to it" (or WWCBBTGATI) system!

Thanks (3)
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By D V Fields
02nd Jun 2016 10:38

Hi Rebecca
Can you remind us of the exact piece of legislation that gives them the right in the first place? Always a useful reference place should HMRC eventually try and extend their powers.

Best regards

Dave

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By hectordog
08th Jun 2016 12:17

I have a small family investment company and deal with my PAYE returns on an annual basis. I duly submitted our FPS (nil return) very early in April and was absolutely staggered to get, on 29 April, a demand for £2,401.96 for a PAYE specified charge plus interest from the Debt Management office. I hit the roof! After 2 sharp letters and 2 phone calls I eventually received a letter of apology confessing to a 'system' error.

Now I am a Chartered Accountant and well able to look after myself in such situations, but what about other small businesses who would have to look to their advisers to sort this nonsense out, presumably at cost to them?

God help us all when we get around to Osborne's fabled land of RTI quarterly reporting if this is typical of the quality of HMRC's systems.

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By AndrewV12
16th Nov 2016 16:25

HMRC have been quite generous up to now, hopefully those who follow the rules and are rarely late when filing RTI should be left alone unchecked, after all.....

HMRC say they want to concentrate on taxpayers who deliberately and persistently fail to meet statutory deadlines,

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By D V Fields
16th Nov 2016 17:28

Although the guidance above says the three day grace period is not written into law - can anyone just remind me of the piece of law that gives them the right to apply a penalty. I know it exists for income tax returns and the like but haven't found this one specifically.
Thanks
Dave

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