PAYE penalties update: HMRC apologise and offer some guidance

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We are sorry for the delay and errors, especially at this busy time of year for everyone involved with payroll work. - HMRC Working Together.

Following the recent wave of late issued 2005-06 Employer Annual Return and Contractor Return penalty notices HMRC has at last stepped in to partly defuse the situation by giving some guidance, explanations and to apologise to payroll e-filers. Penalties will not apply to those who filed test returns thinking that they had made a valid submission. The deadline for outstanding appeals is also to be extended from 23rd April to 30th April.

HMRC points out that the penalty issued of 100 for every 50 employees and/or subcontractors for each month a return is outstanding (900 to date in most cases) is based on information rec...

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03rd May 2007 15:50

I've rumbled them!
We were sent a P30BC payslip booklet for a new company registered at our address in December 2006.

We have received neither a P35 nor a AR1N reminder for that company.

We're being set up for a £900 fine in September, but we ain't falling for that one.

Monkeys! It's tax fraud in reverse.

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By JSJ54
03rd May 2007 11:04

HMRC don't really want to help!
I note that HMRC "are taking steps for the 2006/07 year end to help employers understand when they have sent a test return. The acceptance message sent from the Government Gateway will be changed on Monday 16 April to include a warning about test messages."

I have just received my first message and it says:

The submission for reference 783/***** was successfully received on 02-05-2007. If this was a test transmission, remember you still need to send your actual Employer Amnnual Return.......

How does this help " employers understand when they have sent a test return"?

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19th Apr 2007 10:13

It's gone...
Whilst the Accounting Web link to the HMRC announcement for this story still works (for now anyway), this announcement has in fact since been removed from the HMRC 'What's New' pages - it was there in the afternoon of 18 April but gone by the evening.
Is someone thinking this is an apology too far?

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19th Apr 2007 10:30

Comment to Tracey
The system that issues PAYE payslip booklets appears to be entirely separate from the rest of the Revenue's systems.

Back in December 2003, we transferred all the employees from a sole trader's scheme to the scheme for the company that he had set up. Since then, we have received P35s and payslip booklets for the sole trader scheme for 2004/05, 2005/06 and 2006/07. We have binned the payslip booklets, but written back each time to the PAYE district enclosing the blank P35 form and asking them to close the scheme. Our letter with the 2006/07 P35 merely prompted the issue of another payslip booklet for the last 2 months of 2006/07. So, we sent a formal letter of complaint and received an apology of sorts from the Customer Services Manager for the Lothians Area back in February 2007. Yesterday, we received a PAYE payslip booklet for 2007/08!

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By Anonymous
19th Apr 2007 10:43

Confusion over message
I am not sure why they did this, but the longer version of HMRC's announcement is here:

and the shorter version (which links from What's new) is here:

I wonder how many other versions are stuffed into othe nooks and crannies on

Why oh why can't everything that is new just be posted to "What's new"?

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19th Apr 2007 11:46

Rolls on floor laughing...
We gave up on yellow booklets some time ago; the agency is useless.

If they want money, they'll have to send a man around! That'll cost them.

And those in charge must be very stupid if they think we're stupid enough to swallow that 'apology'!

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19th Apr 2007 14:24

It isn't just HMRC
HMRC are not alone. At least there is now an indication that they will listen sympathetically to many appeals against a £900 penalty. Other Government departments are just the same. Consider the NHS, the Home Office, DEFRA........and so on.
Despite professing to encourage enterprise, the Government, the numerous quangos and the bureaucrats are stifling business. I find it frightening and I can only see that the siruation will deteriorate.

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19th Apr 2007 16:08

Any apology or any move...... to be welcomed and clearly must be a step in right direction, most especially given the incompetent initial high level responses to this crisis - and I don't think crisis is too strong a word.

It is a real own-goal by HMRC in the first place, greatly exacerbated by the consquent initial high level response ; so shockingly intransigent, unsympathetic and lacking in foresight as to the uproar that would result.

I can't go so far as to say they should give an "amnesty", since it would be quite inapproriate for many cases.

But the 2005-06 situation is just a mess.
In contrast, for 2006-07 all sorts of notices to file are (quite rightly) flying around.
No small business could claim in 2006-07 to have inadvertently fallen foul of a filing requirement which is technically required even where no tax is due. So no mercy on penalties would be appropriate (direct parallel with company tax returns, where notices are issued). But that just did not happen in 2005-06.

I can't help but feel part of this is a "revenge" against small businesses claiming £250 onlime filing incentives where no tax was due. I don't know of a single company or adviser who thought this was anything other than bizarre, and can only have come about due to a complete horlicks by those responsible for drafting and checking the legislation. But two wrongs just do not make a right. And indeed many of those who received this spurious and unjustified windfall will be the very ones who are filing correctly anyway !!

HMRC should not underestimate what a bog-up this has been, and those affected (170,000 !! - perhaps more - who checks the figures!!) , even those who eventually get a nil penalty ,are up in arms. Those who end up forking out £100 will be more than up in arms and increasingly tempted to take the law into their own hands, not a place those of us involved in UK tax compliance would wish to go.

No doubt "wolf" has been cried before about the delicacy of the culture of compliance, which remains widespread in UK. But own-goals of this nature will just not help.

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20th Apr 2007 08:39

crocodile tears apology?
The reason given that 2005-06 interim penalties were issued so late is
“we wanted to ensure that we maximized the penalties we were able to levy. We took the decision not to issue 2005-06 reminders for the same reason. The delay has enabled us to issue loads of massive penalty notices for any unprocessed returns. Although it would have been simple to whizz out reminders on 30th June to chase up missing returns we chose not to in order to ramp up our figures for penalties levied, and the collateral benefit of this was to further alienate the oppressed taxpayers agents in the UK”

How come the Collector is capable of harassing taxpayers by telephone at 8am, but the PAYE inspector does not have the same telephone budget etc.........
What's the matter with making a determined effort to communicate with registered advisers by email to reduce the friction from these problems? It's easy --> I write to some central database in Scotland/Newcastle/Newry and tell them who i think i look after, and we then COMMUNICATE instead of fight........

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24th Apr 2007 08:23

Muggers throw money away themselves
My irritation grows with every unnesseccary batch of post received.

My company does PAYE for many new companies. We register as their agent and file FBI2s (on the basis that HMRC will loose at least half the paper you send, so this way one message may get through).

This year a stream of "advice letters" has arrived each with glossy card leaflet, each company in a separate envelope, addressed to "XYZ & Co ACCOUNTANTS" saying "are you new to PAYE? we can help"

Obviously, none of them can read; or think.

Luckily, my local authority has provided recycling bins.

Save the planet, anyone?

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By andlib
23rd Apr 2007 10:54

Penalty Appeals PAYE
We referred a client who had received the £900 penalty to the tax office under general advice to complain that had he been reminded earlier he would have remedied the position earlier. He received an immediate £300 reduction. Should we now formalise the appeal to see if we can get more (or should that be less)?

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23rd Apr 2007 16:57

Never known a mugger haggle before.
Good question, Andrew.

Is that meant to be some form of appeasement? Oh, £300 off if you pay now. The parking scammers immediately spring to mind.

What are they saying, they should have sent a reminder at six months?

Well at zero months, the penalty would have been £nil.

Their laughable psychology only antagonises further.

I am increasingly minded that everyone should appeal every penalty, even knowing they are 100% in the wrong. Jam up the whole sysyem and waste all the fines money collected in extra costs. Play 'em at their own game & see if they like it.

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27th Apr 2007 12:58

Fair's fair
I refer you to

There are numerous points therein which would suggest you should by rights pay nothing since HMRC have not kept their side of the bargain.

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27th Apr 2007 13:39

I thought the taxpayers' charter had been dropped!
I remember when it came in; we were all dubious that it could be done.

Yet the Revenue's answering of post & general attitude improved markedly very quickly. We were genuinely impressed.

And it all seems to have slid backwards again.

We should have a sweepstake:

1. Taxpayers' Charter v2

2. Complete implosion of HMRC

Any takers?

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By Anonymous
28th Apr 2007 08:38

Bad Service & Increased Fees
I assume that everyone has been increasing their fees over the past ten years since the Charter ceased to mean anything.

If so, then the Revenue has reduced its costs and we're better off, so everybody's happy, aren't they?

Oh no, I forgot about the taxpayer, who has to bare the increased anxiety, costs and irritation.

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19th Apr 2007 12:20

“We want to use employers’ experiences to understand the reasons
Thats DoubleSpeak for : "We apologise and want you to put it right".

I wouldn't accept an apology on those terms from my closest friends or family.

I think Nick has got the right way of handling them.

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27th Apr 2007 16:56

if it had ever been dropped you would have seen it bounce!!!

It was never worth the paper it was written on.
The suits who wrote it should have spent their time answering phones, and providing a semblance of service to users....

Has anyone tried ringing a tax office using the plebs numbers instead of the Agents numbers recently? it's disgusting to treat people that way.

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09th May 2007 13:06

is Gordon reading this?
he really needs to focus on the emotions in these postings, as they display how agents feel about hmrc relations.

as hmrc relies on us to do loads of work for them, they really ought to focus on how to raise the index to say 6/10 on the perfection scale. i know how it can be done, at no cost to them, but I'm not telling them without being greased with large amount of cash.....I'm fed up with fixing things that should not be broken for free

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09th May 2007 17:21

and Primadonna?
What about dopey Dawney, too?

Mind you; we're mistaking them for people that actually give a toss.

They might do if their jobs depended on it. Obviously not.

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