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New penalty rules for late PAYE returns

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6th Jun 2014
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Businesses who file late tax returns will face an escalating penalty based on their size and the number of months the return isn't filed. 

This is one of several changes in effect under the Revenue's new penalties system. It will apply to tax returns up to, and including, 2013/14.

The penalty will be £100 per 50 employees for each month or part of the month the return is outstanding from 20 May 2014 to 19 September 2014.

Also, as part of HMRC's transition to in-year RTI penalties for late and non-filing, it's changing its approach to penalties for late PAYE returns.

When a late return is received, HMRC will issue a revised updated penalty notice showing the correct amount of penalty due.

The ICAEW's Tax Faculty said the new system will affect 2012/13 and 2013/14 tax years to avoid confusion as the new interim penalty rules need chasing letters of their own.

As the faculty notes, for last few years HMRC has been issuing penalty notices earlier to avoid shocking employers with escalated PAYE penalties some months after a missed end of year deadline.

Currently, an employer who has missed a deadline will then receive notice of the ever increasing penalty charge every few months. 

"The problem HMRC is trying to pre-empt would otherwise occur after October 2014 when new in-year penalty rules first come into effect," the ICAEW says.

"Employers incurring these will be getting their first penalty notices in January 2015, which is when HMRC would traditionally also have been sending out the next batch of chasing end of year penalty letters for any older outstanding returns."

2012 to 2013 tax year

HMRC will not now issue a third penalty notice (originally scheduled for issue at the end of May this year) to employers who have not yet submitted their 2012/13 return which was due on 19 May 2013.

The Revenue said it would continue to pursue missing returns by virtue of the penalty notices already sent to those employers in September 2013 and January 2014.

2013 to 2014 tax year (filing deadline was 19 May 2014)

In addition, HMRC said it will soon write to employers who they believe have yet to submit their outstanding 2013/14 return, to alert them to file before their penalty builds up further.

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Replies (7)

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By lisa65
06th Jun 2014 18:08

Typo

The penalty will be £100 per 50 employees for each month or part of the month the "returning" is outstanding from 20 May 2014 to 19 September 2014.

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By John Reid Chester
09th Jun 2014 12:37

PAYE Penalties

I understood that all RTI penalties for late returns were suspended until October 2014 -- have I got the wrong end of the stick?

 

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By Julian Law
09th Jun 2014 14:40

PAYE penalties
https://www.gov.uk/government/news/hmrc-unveils-new-timetable-for-rti-pe...

The above link provides the timetable for penalties published in Feb 2014.

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By ringi
09th Jun 2014 23:17

Why so low.

So for messing up the benefits of a 50, including over and under payments the empoyer is only charged £100.   This is FAR too low.

Just think of the time any employee on universal credit will have to spend on the phone due to their employer filing late!

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By johnporter
11th Jun 2014 09:06

Late filing

Maybe it is time that everybody was responsible for their own Tax returns etc & employers Only Pay out Gross with no deductions for student Loans,Child Benefit, pensions,going to the dentist etc.

Alternatively

The Burden on Employers especially small business is Just Ridiculous & maybe it is time that 

Inland Revenue/Government took responsibility for making wage payments etc & deduction the Gross due by the employee (at no cost). Then they they can charge themselves when they 

get it wrong.

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By ringi
11th Jun 2014 09:29

Or maybe
Each person have one  “gross” bank account (from an approved bank of their choose)All employment income must be paid into that bank accountThe bank must work out the persons employment taxes, student load, count ordered payments etc and then deduct them from each payment into the account.

OR

The employer tells the Inland Revenue what the persons wages are,The Inland Revenue informs the employer within seconds how much to pay the personThe Inland Revenue provides a PDF to the employer to explain the above to the employee.One payment is made by the employer to the Inland Revenue that is then divided up to cover employment taxes, student load, count ordered payments etc

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By johnporter
11th Jun 2014 18:04

Paye

Mind you it will take 2 inland revenue staff  for each Taxpayer & still get it wrong

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