The number of compliance notices and escalating penalty notices is fast increasing as the number of small and micro employers reaching their staging dates grows. Some employers have decided that automatic enrolment simply does not apply to them and are therefore ignoring the correspondence that has been issued to them from the Pensions Regulator (TPR).
In July to September 2016, there were 3,728 fixed penalty notices issued to employers. These employers failed to comply with their AE duties for any number of reasons. Some employers are asking TPR to review their decision. A small number are contesting their fines at a tribunal, claiming they had a reasonable excuse to not comply.
The most popular excuses range from being confused, thinking their payroll bureau was automatically managing it for them, sickness or being short staffed. All of these reasons are not a reasonable excuse to avoid automatic enrolment and the employers penalties remain in force. TPR states:
“A reasonable excuse for HMRC’s purposes may not be enough to avoid an automatic enrolment fine.”
The concept of a reasonable excuse is something that unexpectedly occurs or happens outside of your control that stopped you from meeting your statutory AE duties. The tribunal states that a reasonable excuse for HMRC’s tax duties and auto enrolment duties are separate. Where a reasonable excuse might be accepted for tax purposes, it does not mean that the excuse will be accepted for AE purposes.
The idea of a reasonable excuse is also used by HM Revenue & Customs (HMRC) for appeals against tax penalties, but the tribunal has made it clear that the two regimes are separate. TPR confirmed that the following are not classified as a reasonable excuse for failing to comply with AE:
you relied on someone else and they let you down.
you found the online system too difficult to use.
you didn’t get a reminder.
you made a mistake.
you or a member of staff were ill.
The Regulator will work with employers that are having difficulty but be warned your clients cannot avoid automatic enrolment if they have employees.
At BrightPay Software, we have a passion for making the financial and administrative aspects of payroll management less time-consuming and easy to use. With years of experience and dedication to this ideal, we have created a range of IT software solutions which are in use by over 55,000 businesses in Ireland and the UK today.