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HMRC delays RTI penalties

12th Feb 2014
Freelance journalist
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HMRC has said that it will delay the introduction of penalties for late "real time" payroll returns by up to one year in response to complaints from accountants and businesses and after errors and technical glitches in the new system. 

It had planed to start fining employers for late filing and payment of employees' tax and national insurance contributions from 6 April.

Under the new timetable for penalties, if employers file RTI late up to October they'll only be charged interest.

After October, if employers file and pay RTI late they'll only be charged a penalty for filing late.

From April 2015, they'll be an automatic penalty for late payment of payroll tax and contributions.

HMRC’s director general for personal tax, Ruth Owen, said: “The introduction of RTI is going extremely well for the majority of employers but there are still some who need a bit of time to adapt fully to the changes. This additional time will give us the opportunity to ensure that improvements to our internal systems are working, to learn from them and to provide better customer support to employers who need more time to adapt.”

The news will be a relief to accountants who have received a rash of incorrect PAYE “no-filing” notices and follows a call from the ICAEW and other professional bodies and software developers for a delay to the imposition of automatic penalties under the real time information (RTI) regime.

On Friday morning (7 February), AccountingWEB member 0098087 reported getting a load of RTI non-filing notices for the period ending 5 Feburary, even though their payment run was on the 7th and their RTI returns on the same day.

The issues wtih RTI are not limited to the generic notification service (GNS) messages that went out last week, but the deluge - which could have run into hundreds of thousands of messages - certainly helped bring the underlying threat of automatic penalties into relief. In its announcement of the new penalty timetable, HMRC also said it would suspend GNS alerts for late payment and non filing until April 2014.

Colin Ben-Nathan, chairman of the Chartered Institute of Taxation sub-committee for employment taxes, welcomed the penalty delays as a "constructive move" on HMRC's part that will give both employers and HMRC time to bed down what is a fundamental change to the PAYE system. "It will also help to reassure employers that HMRC does not establish deadlines in an arbitrary manner but is responsive to the concerns and realities of those on the ground," he said.

“There are also still some problems with RTI itself which need to be addressed by HMRC. And so we think it is absolutely right that the imposition of automatic penalties should be delayed until these problems are fully investigated and resolved.”

Peter Bickley, technical manager at the Institute of Chartered Accountants in England and Wales, said the delay was "very good" news but said there is still plenty of room for improvement in the new payroll system. He said HMRC needs to make its RTI software easier to use for employers entering payroll information and to reduce discrepancies in information.

"When employers enter joining and leaving dates for employees instead of putting the correct dates they have to put dates in to suit HMRC. For example, if an employee joins a company in March 2013 the employer may have to enter 6 April 2013 as the joining date into HMRC's RTI system so it's the correct tax year for HMRC's IT system."

Payroll software suppliers such as Hampshire-based Moneysoft that have been busy handling customer questions about problems with sending RTI information will also welcome the delay to penalties. Further improvements to HMRC's IT would also help. 

Moneysoft managing director George McHamish said HMRC could save everyone a lot of hassle by giving more information in its late-filing notices for RTI -- for example stating which week's payroll return was late. 

For further reactions, see the comments below, and also visit the Editor's blog, RTI penalties: A drama or a crisis?


Replies (27)

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By Robert Lovell
13th Feb 2014 10:49

Reaction from Sage

Comments on the RTI penalty delay have been coming in thick and fast since HMRC made the announcement yesterday.

Neilson Watts, an RTI expert at Sage UKI, said:

“Today’s extension of the deadline gives businesses some welcome breathing space and should be applauded, but it’s a stay of execution.

“For the majority of firms RTI represents business as usual. According to HMRC figures 93% of employers and 99% of PAYE employment records are being submitted on time and accurately. The expectation is that all firms should be filling in real time now, and anyone that isn’t needs to act.

“Late payment penalties for outstanding PAYE and NIC liability have also been extended until April 2015, but businesses will still be charged interest on late payments from April this year.

“Equipped with RTI compliant payroll software that takes care of RTI compliance with a click of the mouse, this doesn’t have to be a massive headache.  With only 7% of businesses not currently compliant, we urge them not to use this announcement as an excuse to delay the inevitable.”

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By DMGbus
13th Feb 2014 13:07

Are Sage just repeating the HMRC line?

HMRC appears to presenting a picture that the current RTI problems are all with non-compliant employers, rather than with HMRC errors.

So the "ever so understanding" HMRC have deferred penalties to help non-compliant employers.  I thought that there are currently lots of COMPLIANT employers sufferring non-filing messages - so THE PROBLEM IS WITH HMRC.  "Spin doctors borrowed by HMRC from polticians".  "HMRC under political / management  pressure to misdirect crticism and blame for RTI problems".

We now have Sage appearing to be repeating HMRC's "story", which in my experience, is an economy of the full truth.

Maybe Sage are, like HMRC management / spin doctors "too far away from the frontline" to have the knowledge of the really difficult issues arising at HMRC end.

Then again, perhaps the hidden / implied sublimimal message from Sage was "buy Sage software and all RTI problems will disappear"  I don't regard the issue as being a software at employer side to be the issue.  Instead I believe that the software issue (flawed design specification and/or implementation) to be wholly the fault of HMRC and it's IT partners.

So regardless of whichever payroll software package is currently being used there will be errors at HMRC end - until HMRC management acknowledge that the problem is at their end and HMRC deal with it now.

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By mikewhit
13th Feb 2014 15:36

No helpful tie-in with the HMRC dashboard ?

Given that a "dashboard" should show a summary of everything at a glance, it's an omission that it provides no data about the RTI status:

- if running, then latest submission

- if not yet configured, a statement of this fact and a link and instructions to at least eg. Payroll Tools to get it started asap.

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By gebanks
17th Feb 2014 08:44


We are getting dozens of late filing and non-filing notices when we have received responses from HMRC confirming reciept of the submissions.We also unable tro send a NIL EPS until after the 5th of a month if there are no current employees, but this triggers a late filing notice.


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By jamiea4f
17th Feb 2014 12:05


Sounds like HMRC are trying to force through something that doesn't quite do what it should..  Think they should focus on getting the basics right before enforcing something like this.  I was told categorically that I couldn't close a scheme for a Limited company, even though there are no employees, whilst the Company was still going, and yet they have now closed 2 schemes for exactly the same reason.   Lord knows what they'll be like when they cut yet more jobs...

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By Carolyn Cunningham
17th Feb 2014 12:23


I am relieved that they have switched off the Generic Messages for the time being as it obviously was not fit for purpose. HMRC need to concentrate on the correct retention and filing of data before any penalties are levied upon businesses. I am amazed it was allowed to go on for so long. It certainly has not saved me time yet.

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By RogerMT
17th Feb 2014 12:28

Employers vs Agents

An employer running their own payroll has little excuse for late RTI filing, but an agent who is reliant on receiving payroll info from their clients in good time is more open to the problem of late filing. Others have suggested that regardless of the frequency of wages payments as long as an FPS is submitted by 5th of each month, no late filing penalties. This would help a great deal. Have HMRC made any response to this entirely reasonable suggestion?

Why do HMRC need to know the wages payments the instant they are made anyway? If a monthly payroll is run and paid, on say, 17th of each month, as long as the info is submitted by the 5th of the following month what's the problem?

The draconian nature of RTI regulations need loosening, but that's stating the obvious!

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By Phi
17th Feb 2014 12:30

Should penalties work both ways

I fully understand HMRC imposing penalties for non compliant employers. This is effectively to punish them and encourage compliance with the rules, and to make sure they do a proper job in future.

Should therefore the penalty regime be extended so that if HMRC do not conform with their rules, ie by issuing incorrect penalty or late filing notices, they should have to pay a similar penalty to the employer. This may at least help recompense the employer for his wasted time, and should encourage HMRC to comply with the rules, and to do their job properly in future.

I appreciate this is somewhat flippant, but I always thought that justice was a 2 way thing!

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By Carolyn Cunningham
17th Feb 2014 13:06

FPS by 5th of the following month

Although this seems an excellent solution, I believe, according to various sources, it can not be implimented because DWP use the data to work out tax credits, so weekly payrolls need to submit each week.

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By Di
17th Feb 2014 13:09

What will be a reasonable excuse for late filing?

RTI appears to be very onerous for the small employer. Administration gone overboard in my humble opinion. Given the recent storms and floods which have effected power supplies what happens if you are unable to file your weekly payroll on time? I realise there's no penalty now but what's in place for when the penalty regime sets in? 

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By RogerMT
17th Feb 2014 13:30

FPS by 5th

...then change the payment of all tax credits to monthly, or make an adjustent to every fourth payment if RTI filing has shown the need for one. Why should the employer or agent do all of HMRC's admin work? Daft question, I know!

I think from now on I shall insist that all my payroll clients pay monthly, or go elsewhere!

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By raybackler
17th Feb 2014 13:37

Scheme closed down

We had a PAYE scheme closed down last week after filing several months of no payments due.  It was reinstated for our client after a 14 minute wait due to the volume of calls the erroneous notices had triggered.  Who made this decision?  Obviously the call centre can't tell me, but it must have been based on the lack of salary in recent months.  The director is going to pay salary to herself in March and needed the scheme!!  How can they make decisions like this without even contacting us or our client?

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By Michael C Feltham
17th Feb 2014 14:19

Once More: UK government screws up!

Clearly, RTI was only introduced in support of and as a foundation stone of the much criticised, Universal Credit benefit system.

As so often before, HMRC's upper echelons of Management and Treasury are utterly out of touch with reality!

Now, instead of trying to roll out one system and de-bugging this first, no, they have to one again suffer a Folly de Grandeur and determine they will roll out two systems, simultaneously.

Remember the appalling attempts with CIS?

Remember Peter Lilley's waste of £1 billion of taxpayer's hard won cash on an abortive benefit card system? And the equally abortive CSA (Child Support Agency)

Will they never ever learn?





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By davexyz
17th Feb 2014 14:35

How the Revenue states RTI works

I started getting these generic notices in February so I contacted the Revenue

All my clients are 9 employees and less. Revenue answer " "system" does not recognise this deregation and if you are late you will continue to get these notices. However there are no penalties at present"

It was pointed out that effectively I was running all my payrolls late as the Revenue MUST have the  pay information ON or BEFORE the individual gets paid. I was submitting my payroll info before 19th of the following month to fit in with CIS EPS's.  This is a no no.

This was compounded by the payroll software setting a pay date of the last Friday in every month. (you now have a variable date in the month)

This is changeable to say the 5 of every month but this default was ignored.  The Revenue see the payroll date on the FPS and then take this as the date the individual gets paid so therefore if you submit after this date you are late

They are sending these notices to get customers in tune with the Revenue's requirements

I also found that the online system via an EPS to close a scheme did not work and also as usual they did not receive my letter stating the same (which was sent as a backup)



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By carnmores
17th Feb 2014 15:25

its all b*llocks

I note the comments etc re weekly payments and benefits but do we know if DWP / HMRC have actually used any of the data submitted this year. and the point about agents is a fair one , i have a couple of clients who pay employees say £200 pw tax paid and despite best efforts we often dont get the details until after payments so i come down in favour of submissions by the 5th of the following month. then there is the problems about errors and corrections , if we are given a wrong figure and the client wants it changed after submission its a hassle re payslips etc , but if we used the 5th that would likely be ironed out.

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By rosataylor
17th Feb 2014 16:07

RTI filing penalty

How will HMRC determine if RTI that an employer submission is late? I am aware that submission after 19th of the month following is an automatic penalty. However, payment of wages between the 5th of the month and the 19th need not necessarily be late as the payroll might be calculated on hours of work provided by the employee. The wages are calculated. The RTI is sent. The employee is paid. How is this late?


Legislation as I understand RTI must be submitted on or before wages and salaries are paid.


Replies gladly received.

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By david wilks
17th Feb 2014 17:03

RTI and other such rubbish

I am angry yet again.

Not only have I experienced incorrect RTI late filing notices, generic notices and other very unhelpful communications from HMRC the latest fashion appears to be sending out spurious letters from Debt Management (from someone named as Helen Bilbao - made up name or city of origin of Helen???) maintaining amounts due for 2013/2014 which covers:

"underpayments - this is where you have not paid enough based on your RTI submissions for PAYE;

Specified charges - these are amounts we have estimated to be due when we have not received the necessary RTI PAYE submissions;

Outstanding CIS payments or outstanding advance payments."


In other words they have no idea why they have written the letter.

I deal with all those of our clients who have received such letters on a regular basis and I know everything is up to date.It is getting so boring that we shall wait for the Court hearing and see what the judge makes of it all.op to this time wasting nonsense. 

Please someone put a stop to all of this time wasting.

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By david wilks
17th Feb 2014 17:05


Sorry for typo in last post.

More angry than I thought!!!!

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By david wilks
18th Feb 2014 10:08

Going monthly

Hold on.

Why on earth should one suggest to clients who pay their staff weekly for every good reason that they should pay monthly. With respect, to blame government regulations is outrageous.

Provided the weekly payroll is dealt with correctly and all acknowledgements of submissions printed off and kept there is, in essence, nothing HMRC can do even though they may try.

Quite simply, for weekly paid payrolls 52 (or sometimes 53 - lord knows how they will cope with that one) RTI's in a tax year or for monthly payrolls 12. I have already made that point to HMRC staff and have suggested they count up the number of submissions in a full tax year rather than bother me or my clients during the year.

Also, why change the date of a leaver just to fit in with the system? I will continue to enter the actual date of leaving because I do not know the ramifications of giving an incorrect date (tribunals etc etc).


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By cmg
18th Feb 2014 12:00

Going monthly

David Wilks,

There is a limit to the detail one can put in these posts, but for the sake of clarity I never sought to tell the employers needed to go to monthly payroll to comply with Government regulations!! I explained that the increased reporting regulations and scope for penalties meant my fees would need to increase measurably if they stayed weekly.

I totally agree that to tell clients they needed to go onto monthly payroll to comply with Government regulations is outrageous! Apart from anything else it is a total lie!

As I said in my post, it is a persuasive selling job! That means persuading them, not telling them they must with a lie. Hope that clarifies!!!

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By Carolyn Cunningham
18th Feb 2014 13:27

Advances of Pay

You do realise that making advances of pay to weekly employees counts as payments and RTI returns need to be sent. I have had many discussions with HMRC etc and they are always clear on one thing.

Employees and Directors ,for that matter, who pay 'advances' against pay due are receiving taxable and nicable pay which is reportable under RTI.

So unless you are one of those special catagory employers who have a weeks grace (or less than 9 employees) to report payments. All payments should be reported on or before payments are made.

This has caused problems for a number of weekly paid employees who get advances for 3 weeks and then the payroll is processed in week 4.

Directors also fall foul of this as they too often pay themselves all year and then process the payments in March. No longer allowed I'm afraid. Tax and Nic's are due at the time the payment is made, which is the whole point of RTI.

But cmg is correct when he persuades his clients to go monthly or four weekly. It cuts down on their costs considerably.

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By david wilks
18th Feb 2014 14:14

Going monthly - Advances of pay


Whilst I fully appreciate you would never lie to your clients I cannot agree to a client being persuaded to change to a monthly payroll even for the reasons you have given.

There are some employees who just cannot manage budgeting a month's money let alone having to wait in the first month of a switch for any wages. I believe this is borne out when the government wanted to pay benefits monthly.

The whole reason for this discussion and the heat it is generating is that the HMRC system cannot cope with real life and we are being held to ransom by inefficient system developers who have no idea of the way things work. Or worse, they do but are having to develop the software "on the cheap". Consequently we are having to put up with time wasting and blood pressure building missives which are just simply wrong (see my previous post "RTI and other such rubbish").

Some of the demands for money that are coming out of HMRC remind me of the dubious practice of some businesses that issue invoices worded in such a way that coerce people into paying up.



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By cmg
19th Feb 2014 11:41


I think the question of whether to go monthly or weekly is entirely down to the client, not the accountant. The client alone makes the decision, and entirely in the light of their and their staff's circumstances. Fortunately all mine were able to make the change. Anyway, it looks like we will have to disagree on this one, so its back to my files!

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By lebrecht
19th Feb 2014 13:27

Full Payment Submission (FPS) Late Filing Notices

Our payroll department runs a weekly payroll for off-site staff. The payroll week ends on a Friday and the employees provide their timesheets on the Monday following the week end. This gives the payroll department ample time to process the figures, carryout the FPS RTI filing and setup on-line payments.

For ease of reference and accounting purposes, the payroll dates are set to the relevant Friday of the week ending that they relate to. My understanding of RTI legislation is the FPS must be submitted on or before wages and salaries are PAID. The payment date is always on the Wednesday following and the FPS’s are always filed on the preceding Monday or Tuesday. Yet HMRC still issue Late Filing Notices. 


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Chris M
By mr. mischief
20th Feb 2014 20:25

no brainer

In my opinion monthly payroll or 4-weekly payroll is about as close to a no brainer as you get in this game, given RTI.

If you look on other posts you will see two of my PAYE complaint cases have just concluded.  In one HMRC posted a client PAYE payment to suspense then moved it out of suspense - a year later after I'd helped them find it - to corporation tax!  You can't make this stuff up.  In the same case they completely messed up an SMP credit which had been correctly posted by me.

In another Benton Park failed to process the 2012-13 NI holiday at all despite having been sent it THREE times.  For the same client a PAYE payment of over £2k was posted by them to the wrong tax year.

The first case began in October 12, the second in May 13.  Both settled - I think anyway! - in the third week of Feb 14.

I have given HMRC one-thirteenth (on 4-weekly pay) or 13/52 as many opportunities to make this kind of muck-up compared to people on weekly.  I have bitter experiences of CIS when all sorts of muck-ups and blunders by HMRC led to fines which took a year or so for them to finally wipe and have no wish to go through all this on PAYE.

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By joro2801
22nd Feb 2014 14:49

What is the RTI payment date?

Guidance on HMRC site states that if the "employee's regular payday" falls on a non-banking day, that date should be used for RTI regardless of the fact that actual payment is made earlier.  Presumably this is because to do otherwise would make the NIC basis period wrong and might change the tax due.

There is no guidance as to what to do if payment is made after the regular payment day.  Is this because Civil Servants never get paid late and cannot imagine that this could possibly happen in the real world?

I pay my (less than 9) employees four-weekly based on time sheets submitted by them with the "employee's regular payday" being one week after the last week on the time sheet - on a Saturday.  Frequently I do not have the time sheets to make the pay calculation on time.  One employee, who is usually hourly paid, also gets paid via PAYE for work he does on site, calculated as a fraction of the total payment allowed for the job (the others on site are sub-contractors) and this figure is sometimes not available until the whole job is finished, which will be after the regular pay-day.  It is substituted for his normal hourly rate pay.

To keep NIC sensible (because it does not adjust cumulatively unlike PAYE) I always calculate the pay using the regular pay-date in PAYE Basic Tools, regardless of when they will actually get paid, and regardless of the fact that this date has already passed.  If I didn't, the tax would also go up and down like a yo-yo - hardly reasonable from the employee's point of view!  I calculate the pay, then do the FPS and then pay by direct on-line banking - so they are always paid after the submission.  This is obviously generating penalty notices because of the pay date I use.

The other issue is that PAYE Basic Tools does not have a password so I keep it on my home computer for confidentiality reasons - having to run the payroll at home also leads to delays.

And what would happen if I am ill or on holiday when the pay day occurs?  There is no-one else who can do the payroll and why should I be penalised for paying late when that is actually between me and my employees?

HMRC needs to fully consider the various scenarios affecting small employers and give proper guidance on its website about how to deal with late paid employees.

Pay advances are another problem - I don't do them but I can imagine that if I did and entered it up in Basic Tools to create an FPS I would get an error message when I entered the balance saying that a payment had already been made in a particular period.  And the basis period for NI is set at the beginning of the year and can't be changed mid-year so doubtless that would also be wrong.

I'm busy running a business and can't be doing with this government treadmill that keeps me running round with the constant threat of penalties for lateness - PAYE, VAT, Companies House, Corporation Tax, Self-assessment... and now RTI.

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By gillsoffice
24th Feb 2014 16:28

Make it easier for everyone!

I agree with the suggestion that the payroll info for one month (for weekly/daily/monthly salary payments)should be submitted by the 5th of the following month. It makes it easier to make sure the info is correct and can be agreed by the client and allows for accountants/employers to submit all at the same time, rather than mess about with different submission dates. It gets more and more difficult to juggle the different filing dates for paye/vat/self [***]/corp tax for a sole practitioner in a cost effective manner (& it would be nice to have a holiday now and then without worrying about missing a deadline).

It would be interesting to know if the DWP are using the info we are submitting or even if their systems are capable of doing so. Seeing as how the paye dept at HMRC seem to have no link to say that the person's tax code they are changing also files a tax return showing other self-employed inc (& therefore they get it wrong) I think NOT!

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