HMRC penalty for failure to register as an employer

HMRC penalty for failure to register as employer

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My wife, who runs a payroll agency, asked me what the penalty would be if an employer just never registered with HMRC (and got found out!). I Googled this and the results, including GOV.UK and AccountingWeb were all focussed on failures to follow RTI - quite understandably. We should remember that Google has its own algorithms and its searches are not perfect.

My assumption is that as all taxes have been harmonised in the penalty regime, Failure to Notify follows similar rules to VAT and Income tax. Plus I assume that the recalcitrant employer would have run up RTI penalties over the period.

Has this occurred with anyone's client, and what was the result please?

Replies (8)

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By Tim Vane
12th Oct 2016 00:53

Well, if they were deducting PAYE and NIC from their employees and not paying it over to HMRC, that would likely represent criminal activity in some form and have fairly dire consequences I would think.

And if they weren't deducting PAYE and NIC from their employees then once HMRC caught up with them I suspect it's likely they'd have to pay all the outstanding employees PAYE and NI out of their own pocket, plus the employers contributions, plus fines and penalties and whatever.

Thanks (2)
By johngroganjga
12th Oct 2016 08:43

As Tim says, I would have thought that for a company who should have registered for PAYE but didn't late registration penalties would be the least of their concerns.

Thanks (2)
RLI
By lionofludesch
12th Oct 2016 09:33

Obviously, there's a possibility that there are no deductions but, nevertheless, an obligation to report earnings over £112 a week or equivalent.

I would have thought that, technically, there would be a penalty for not submitting an RTI on time - £100 a month. But I've not researched it or come across such a penalty being charged.

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By alan.rolfe
12th Oct 2016 09:34

Reiterating the above.. I have come across a prospect who had been imprisoned for failing to pay CIS deductions from a workforce to HMRC. Presumably such actions for PAYE could also lead to the same result.

There may be money laundering issues to consider regarding the payroll agency and I would suggest you consider carefully if/how/when to report your wife, but obviously don't tip her off!

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Replying to alan.rolfe:
paddle steamer
By DJKL
13th Oct 2016 11:10

alan.rolfe wrote:

I would suggest you consider carefully if/how/when to report your wife, but obviously don't tip her off!

I think the when is crucial.

In my case I would need to get the timing right so her long holiday started circa April, to correspond with the brown trout season.

Others might have different timetables if say golfers, scuba divers etc.

Tricky bit is working out how much time to allow from reporting to her cell door clanging shut.

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David Ross
By davidross
13th Oct 2016 11:26

Thanks, people.

Happily there is no real case at stake - just curiosity. But it is interesting that no-one has jumped in with a clear answer, and that Google does not either.

You are right that people have been in severe problems for failure to deduct but those cases are usually big in lots of ways, involving other taxes such as VAT

We were wondering what the normal tax penalty regime is and would have thought it would be easy to look up - clearly it is not!

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avatar
By Jack Spratt
13th Oct 2016 17:28

What would the position be if the employer had one employee/director who was paid, say, £8060 a year and whose income was too low for any tax to be payable?

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Replying to Jack Spratt:
RLI
By lionofludesch
13th Oct 2016 17:55

Easy - £100 a month.

This director/employee needs an RTI every month to maintain his NI eligibility.

I would imagine that an employee making a claim for something or other and finding that his NI record is not up to date might be the trigger for such a penalty.

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