Save content
Have you found this content useful? Use the button above to save it to your profile.

Sage P35 error affects 5,000 employers

19th Jun 2013
Save content
Have you found this content useful? Use the button above to save it to your profile.

Some Sage Payroll users were affected by errors in their end-of-year P35 submissions.

Around 5,000 employers will receive P35 interim penalty letters from HMRC after filing RTI returns when they weren’t part of the RTI pilot programme.

In spite of dispatching the letters, the Revenue has agreed to waive the penalties on this occasion if the employer submits their P35 by 25 June.

The 5,000 is under 1% of Sage's payroll customers. The company provides payroll services to over 500,000 UK employers. 

A spokesperson for Sage said that while employers mistakenly filed RTI returns when they weren't invited to do so, the developer was working closely with HMRC to resolve the issue.

“Sage has been working closely with HMRC throughout the RTI pilot programme. We picked up this error as part of our RTI support and immediately notified both the customer and HMRC.

“We have agreed with HMRC for the penalty to be waived on this occasion. We are providing additional support to those affected customers to resolve the issue and ensure this does not happen again,” they said.

According to HMRC, which initially declined to confirm the payroll provider involved, the issue does not affect employers who took part in the RTI pilot.

Affected employers should also have been contacted by the Revenue during the last week, with specific guidance on how to file their P14/P35s for 2012-13.

AccountingWEB members debated the issue on Any Answers, with one commenter saying the issue “doesn’t make sense”.

“I suspect that this is a variation of the now well-known problem of HMRC unilaterally putting new PAYE schemes in 2012-13 into the RTI pilot and then, failing the submission forms of P35/14 for 2012-13,” was Euan McLennan’s theory.

Sage user Kazmc worried that HMRC and Sage were confirming their end-of-year declarations would be accepted even when submitted after 19 April, when 100 had not.  

“We have the correlation IDs and confirmation emails to show they were accepted but apparently they have been put in the wrong year. So now, all of our clients are going to receive penalty notices,” they wrote.

Two other members commented that they too had received penalty notices, but at the time of posting, had not heard anything from their payroll providers.

Other recent Any Answers report P35 interim penalty warning letters, including some users not being able to process P35s through payroll provider Moneysoft - but may be related to a different issue. 

Have you been affected by the P35 interim penalties or similar situations?


Replies (19)

Please login or register to join the discussion.

By carnmores
19th Jun 2013 17:51

the first real big bang

who is opening a book on what is next

Thanks (2)
By Kazmc
19th Jun 2013 23:03

We were not contacted by either HMRC or SAGE to let us know of this problem that affects 100 of our client payrolls. We only found out when chasing an SMP refund and contacted HMRC to be told they were awaiting the yearend return.

Thanks (0)
Euan's picture
By Euan MacLennan
20th Jun 2013 10:04

What was the actual problem?

"A user error has affected 5,000 employers who filed RTI submissions with Sage payroll instead of their P35s. HMRC said however that it would waive the penalties."

"A spokesperson for Sage said that ... employers mistakenly filed RTI returns when they weren't invited to do so."

If it was a user error, why would HMRC waive the penalties?

Did the users think they were filing P35s, but the Sage software actually filed RTI submissions?  Did the Sage software report that it had successfully filed P35s, rather than RTI submissions?  Those would not be user errors, but programming errors.  But if so, why did it only affect 1% of Sage users?  What was different for the other 99% of Sage users who got it right?

Perhaps, Kazmc can enlighten us.


Thanks (1)
By david crombie
20th Jun 2013 11:46

The first we knew of the issue was when hmrc rang to chase up a P35 for a client. Something else going on here though as we have email evidence from HMRC that the client has been accepted for early adoption of RTi so surely no P35 was due? It took online services to locate the RTi submissions and then push that onto the clients account. We have since recieved letters on 2 more clients and are waiting on online services to correct.

Thanks (0)
By lamidey
20th Jun 2013 14:05

May explain the issue I experiened

We were told by Sage that we had applied to join the Pilot on 6th December - the person who does the payroll wasn't in the office on that day and if they had and had clicked join the pilot I would have had an immediate call or they would have called the helpline as the screen was alien to them and they wouldn't have understood it.

I realised something was up when I couldn't print a P35 when doing the reconciliation and ended up having to use the PAYE basic tools to submit year end manually. After several calls to Sage and a couple to HMRC. 

Grateful that its the last time will ever have to do that!




Thanks (0)
By gary.ging
20th Jun 2013 15:14

An update from Sage

Hi all, Gary from Sage here.

As the above article says, we’ve been working with HMRC to identify the root of this issue as it has affected a small number of employers. HMRC’s systems would normally reject incorrect submissions and the user would have been able to complete the correct type of return. The user will not have been presented with a message to confirm successful filing of a P35, rather the RTI end of year routine. This does not impact those people who were in the RTI pilot period and should have submitted under the RTI routines.

We spoke with HMRC and got it agreed that this small number of employers would have their penalties waived due to the ambiguity over HMRC accepting these submissions and to help in the transition to RTI.

We have since contacted all customers on our systems who are recorded as having the incorrect submission type to explain how they need to respond and followed this up over the past few days to make sure we can support all these people to the maximum extent possible.

Kazmc – one of our support team will be in touch shortly to help with the issue you raise.

Since the 6th April we have enabled more than 120,000 customers to successfully complete more than 2 million RTI submissions. We will continue to be pro-active in our support of our customers during the biggest transition to PAYE reporting and in our conversations with HMRC., but if anyone else is having any challenges please let us know by contacting our support team on 0845 111 1111 for accountants or 0845 111 5555 for other payroll users.


Gary and the Sage team.

Thanks (1)
By carnmores
20th Jun 2013 16:43

yeah right typical PR tosh

' a small number of employers' .........

have Sage had to pay anything to HMRC if not why not?

Thanks (1)
By finegana
20th Jun 2013 20:08


Why can't they just be straight and say "we made a mistake" many of those affected employers have already paid their fine as they live in fear of crossing HMRC?  If Sage actually cared about their customers and professional introducers/partners then they would stop being so greedy with their fees & charges and show a little more concern about this situation.

Thanks (0)
By David_Lewis
20th Jun 2013 21:43


In case you've missed it Sage didn't exactly endear themselves to the accountants born before 1980 in this article

Thanks (0)
By cooperacc
21st Jun 2013 10:35


I got reminders for my clients asking for P35 to be submitted,  so knew the returns hadn't been received so just altered the date in sage back to the 5th April, as better to have them twice than send 50 appeal letters out and deal with the fallout after...

Thanks (0)
By Fran001
21st Jun 2013 11:17

Process date issue

We got a letter daying we hadn't submitted Year end, which I initially ignored, as I knew we had. On second chase we looked more closely and saw the submission receipt was actually for an RTI file not a year end file. Calling sage who no longer support us as we moved to Moneysoft for this year, they kindly explained I hadn't changed process date and that was why submission was incorrect. Whilst I accept I made the error, it is of course very poor of Sage not to indicate that the wrong type of file has been submitted. All sorted now though. Not sure if there are other issues too, but we weren't in any pilot, just bog standard payroll for 20 weekly employees. The chap I spoke to at SAge said they were working with HMRC to waive potential penalties.

Thanks (1)
Replying to Red Leader:
Euan's picture
By Euan MacLennan
22nd Jun 2013 11:48

At last, an explanation!

Fran001 wrote:

On second chase we looked more closely and saw the submission receipt was actually for an RTI file not a year end file. Calling sage ... they kindly explained I hadn't changed process date and that was why submission was incorrect. Whilst I accept I made the error, it is of course very poor of Sage not to indicate that the wrong type of file has been submitted.

Thank you, Fran, for answering the questions in my earlier post, but I am still not entirely clear.  Did you click something in the Sage program to submit a P35 specifically or more generally, an End-of-year return?  If the submission receipt actually said that it was an RTI file, why do you blame Sage for not saying that it was an RTI file?  If the problem was that you had not changed the process date (back to 6th April?), why do you accept that it was your error?  Had Sage actually said that you needed to reset the date into 2012/13 in order to file a P35 for 2012/13?

I appreciate that this is now just a forensic issue, but I am curious as to how a failure arose for which HMRC was prepared to waive the penalty.

Thanks (0)
By Fran001
24th Jun 2013 06:28

Hi Euan

With sage payroll, to do a year end, the process date always has to be set to 5th April, and in previous years the software told you if you were on wrong date before it allowed internet submission.

There is a lovely little flowchart in Sage which you follow as part of year end process, to make sure everything is printed & reconciled, so yes, I clicked on "make internet submission to HMRC for year end" and of course it didn't!

This year the software doesn't warn you to check process date, you get a successful submission receipt, despite the fact it sends an RTI-EPS file and not PYE year end file. So my fault for wrong date, and not checking submission receipt (who does if it is sucessful?) but Sage at fault because no warning on process, and HMRC at fault for accepting file and not showing any kind of error.

We are now using Moneysoft and wish we had changed years ago, so much nicer and cheaper too without compromising on quality!

Hope that helps

Thanks (0)
Euan's picture
By Euan MacLennan
24th Jun 2013 09:53

Thank you, Fran

... for your very full explanation.  It is difficult for people who don't use a particular piece of software to understand the specific process which is required to achieve the same goal that they know how to do on their own software.

Welcome to the ranks of Moneysoft users!

Thanks (0)
By finegana
26th Jun 2013 10:01


I think we will be looking at this too, Sage Accountants Club is way too expensive.  Is there a discussion anywhere regarding alternatives to Sage for book keeping and final accounts/CT software on here? A full suite would be excellent...

Thanks (0)
Replying to Portia Nina Levin:
By cbp99
29th Jun 2013 17:06

Sage alternative

The oft recommended alternative to Sage is VT bookkeeping and final accounts

VT does not do CT returns, but it does the computation, and the ixbrl file which can be readily attached to a TaxCalc CT return.



Thanks (0)
By C McD
03rd Jul 2013 18:17

Back to RTI !


I was part of RTI test group from Dec/12 and have just found out that the P35 did not reach HMRC either.

I note the extension for submission to 25th June 2013, but clearly we have missed this date, so does anyone know if HM Rev are still charging companies with a late penalties fee?

Interestingly enough, the sage 'wizard' instructions/help info for the P35 wizard isunderlined below:

How do I do this?

1. From the Payroll Year End Wizard Main Menu, click the button next to step 4. 

Button next to step 4 are for the P60's!!

No P35 wizard button on 'payroll year end'.

Will need to contact sage to find out what is happening and at least to produce the P35. I just assumed, due to it being a new process, that because the system produced the 'year end  declaration' that it was part of the 'new process' !!

One tries so hard to work in a responsible manner and yet, no matter what, you still feel that you have let your company down.

Thanks Sage !!

Thanks (0)
By gg
03rd Jul 2013 21:43


Hi C McD,

If you took part in the RTI pilot then there was no requirement to send a P35 and the only process you needed to follow was the RTI year end routine which just consisted of completing the end of year declarations.

From what you have described it sounds like you did do this, so as long as you followed your year end guide and made the submission by 19th April then you will have completed everything you needed to do under RTI.

We are aware that some employers who took part in the RTI pilot have received a P35 notification letter from HMRC in error and if this is the case then you should contact HMRC to confirm that there is no penalty.

If you are unsure about anything then please PM me or contact our Customer Services department and they will be able to advise further.



Sage (UK) Ltd

Thanks (0)
By C McD
04th Jul 2013 11:01

Response to Gary @ Sage

Hi Gary & anyone else interested,

So, after 3 phone calls with HMRC, it turns out that you are correct (Garry from Sage) that if the company were part of the RTI pilot scheme, then there would not need to be a P35 submission!

Matt, from HMRC, (3rd and only competent person i spoke to, though all were very, very polite), confirmed what Gary said and was unable to tell me why HMRC contacted me in the first place.

So fingers crossed that they know what they are doing and we do not end up getting a penalty notice.

Thanks Sage, a bit stressfull, but all is well that ends well. :)


Thanks (0)