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Thousands of PAYE penalty letters sent in error

4th Jul 2014
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HMRC has sent about 12,500 penalty letters in error to employers who had filed their payroll returns for 2013 to 2014.

The Revenue said nearly 10% of penalty letters sent were to employers who had filed their PAYE information for the tax year ending 5 April 2014 because its computer system didn’t recognise returns had been submitted in four situations:

  • A month 12 Full Payment Summary with zero financial values, declaring final submission for the year
  • A month 12 Employer Payment Summary (EPS) with zero financial values, whether or not declaring final submission for the year
  • A month 12 EPS claiming CIS deductions suffered
  • An “Earlier Year Update” with zero financial values

An HMRC spokesman apologised for any inconvenience caused by the penalty notices sent in error.

He said HMRC will have updated its system before the end of August for the issue of the interim penalties in September.

“We are also updating all the employer records involved, and no further action is needed by employers," they added. 

All other employers should send their PAYE information for the tax year ending 5 April 2014 as soon as possible, HMRC said.

Errors in payroll tax bills have caused hassle for the clients of Accounting WEB subscribers. Experts have blamed new payroll software.


Replies (7)

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By rockallj
04th Jul 2014 13:01

According to HMRC RTI is working

At least finally, in their previous arrogance HMRC have realised that RTI is NOT working.

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By barleymow
04th Jul 2014 17:18

RTI Penalty Letters

I have had to deal with 2 of these now involving half an hour each time to the employer helpline most of it just trying to get through. HMRC should withdraw all PAYE penalty notices until such time as they have fixed their system. It causes stress to business unecesarily


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By the_Poacher
04th Jul 2014 22:25

the company who built the IT system concerned pay compensation for our wasted time deakibg with these or will the taxpayer be flooring the bill. Again.

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Chris M
By mr. mischief
07th Jul 2014 07:50

it beggars belief!

Last month I spent 15 minutes on the phone getting HMRC to apply a 1000L code for a client.  This client still had a company car going through her code for a job she left in June 2013.

This morning I find a P6 waiting for me in the online notices, the car is back on her code again.

Utter, utter, utter drivel!

If HMRC are stupid enough to press ahead with RTI fines in October - and if we are honest, they definitely are - in my view the system is going to grind down just with the appeals.  I for one would have appealed roughly 95% of the "fine notifications" my clients have received since HMRC came in, which have arisen from a combination of silly rules and lack of integrity within the HMRC database.

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By MarkKing
07th Jul 2014 12:49

Try as we might to do the right thing, HMRC just get in the way

We've had to deal with a few of these in the past few weeks. After multiple calls and security checks we finally get told (by and large) to ignore the notices. We had a few schemes closed at the end of 2013-14 receiving penalties for no filings in 2014-15. When queried we got the response "I can see the cessation date on your filing but we haven't updated the record, please ignore the notice".

I'm very thankful we try to set up our address as the correspondence address for PAYE schemes. If the client got these notices they'd call us incompetent (has happened) despite the fact that HMRC screwed up.

@ Mr.Mischief - that PAYE coding example is a perfect example of why many agents running client payrolls just disregard the notices. You spend your professional time, for free, to correct an HMRC error only for them to repeat the mistake.

HMRC will push forward with fines in October and we will end up spending a significant portion of our working life dealing with them. They could at the very least add PAYE to the agents line prior to rolling out automated fines so that we have a hope of contacting them. The current PAYE line not only waffles on about useful information on their website (can't help with client specific queries HMRC so stop wasting my time) but can then just cut you off if it is overloaded. Come October we'll all have to adjust our working day so that we spend 8am to 9am and 7pm to 8pm on the Employers Helpline most days.

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By Kate Upcraft
08th Jul 2014 07:11

it would help if the apology was accurate
we discussed these incorrect penalty notices with HMRC at the RTI joint taskforce yesterday. We have asked that as HMRC have identified those that are incorrect that they contact those schemes to confirm that the penalty is cancelled as we don't feel that agents and employers should have to make a judgement about which penalties can be ignored - HMRC have declined. It is also unhelpful that the wording of the 'what's new' that they issued to explain which scenarios had caused the incorrect notices is in itself incorrect!
It is not possible to settle your filing obligation for 13/14, or any other year, by the submission of an earlier year update. End of year declarations can only be made on an FPS or EPS up until 19th April and on an EPS post 19th April. An EYU is simply for employee level corrections. Sadly this inaccuracy is repeated on the penalty letter itself as it asks the recipient to avoid the penalty increasing by providing an EYU to 'close the year down' which is impossible (or certainly should be based on how HMRC's systems are supposed to work.
As to CIS it seems that it is only if 'CIS suffered' was the only entry on the final EPS alongside the the year end declaration that the scheme has not been recognised as closing the year. If SMP for example was reported too then the scheme was finalised for the year. Here's hoping we can work with HMRC improve the accuracy of the wording and targeting of penalties before October.

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By markabacus
08th Jul 2014 15:05

HMRC at their best, IRIS haven't helped either

My wife has had several of these letters and had to explain to the client that everything had been done by us and it was a Revenue error.

With that and the £2k NI allowance my wife seems to spent half the month sitting in call queues at HMRC. The last one re NI the HMRC person commented they had had no end of problems with payrolls claiming the allowance, mainly IRIS users.

IRIS have finally acknowledge the bug!! Not before time. Pity they didn't reply to my wife's emails weeks ago!


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