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RTI penalties for quarter four have landed

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12th Jun 2015
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At last, the long awaited penalties for month 12/quarter four have started to arrive with employers and agents, writes Kate Upcraft.

These are for the period ending 5 April even though we are now nearly at the end of the next quarter which ends on 5 July. You’ll recall that on 17 February HMRC announced RTI compliance regime mark three when they introduced the three-day easement to the ‘on or before’ rule so that as long as any ‘payment dates’ attached to each employee record in the FPS were not more than three days prior to the actual FPS filing date, then the return would be deemed to be made on time. This is an additional easement that does not displace the other late filing reasons that have been in place since April 2014 and provide exemption from a penalty situation arising. The three-day easement is in place for the whole of the 2015/16 tax year.

As I write this the penalties that I’ve seen so far do raise some questions that I hope we may get more clarity on from HMRC over the coming days, these are:

  • If these are penalties for the period ending 5 April 2105, why do they include penalties for the quarter that ended on 5 January 2015 as these should have been issued in February?
  • Why haven’t these penalties been preceded by a Generic Warning Notice?
  • Didn’t the first tax month with a failure post the introduction of penalties qualify as an unpenalised failure, apart from employers with less than 50 employees for whom a failure in month 12 did lead to an immediate penalty? Yet I have seen a penalty charged for the period 6 October to 5 November 2014.

Bear in mind that these are not just late filing penalties, they are also for having sent an insufficient number of FPSs based on HMRC’s filing expectation i.e. four per tax month for a weekly pay frequency. It may be that their systems are not sophisticated enough to detect that just because an employer sent four FPSs (three for monthly pay groups and one for quarterly paid employees) for a month, the following month only three are due as the quarterly paid employees are not due to be paid. A Nil EPS can’t be sent in this situation as there are FPSs due to be sent for some employees within the PAYE scheme.

If you have received a penalty and believe it to be incorrect you should appeal it using the new online Penalties and Appeals Service (PAS). This is accessed through PAYE online and is available to agents as well as employers using the unique Id on the notice to select the correct penalty. Do ensure you take a screen print of the appeal as you will not be prompted to do so and once the appeal has been made the penalty will disappear from PAYE Online, so your screen print will be the only proof you have appealed – the reference number that is displayed on the screen cannot be used by HMRC to find the appeal.

Once the appeal is lodged, there is a drop down menu to choose the reasonable excuse as well as a free form text box, you should receive either:

  • A generic notice saying that the appeal has been accepted which will be followed by a postal notice cancelling the penalty, or
  • A generic notice saying that the appeal has been referred for further investigation
  • Despite the penalty notice saying you should pay within 30 days this is not necessary if you have lodged an appeal.

We had also expected to hear this week about the future of RTI penalties as this was trailed in a press release from HMRC last Friday (5 June) but no announcement has been made and the press release now no longer has the sentence indicating an imminent announcement. It may be that the announcement is related to the outcome of the recent consultation on penalties, watch this space.

Kate Upcraft is a renowned conference speaker and writer.

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By Mike Nicholas
15th Jun 2015 14:12

HMRC's RTI system - filing expectation

Kate

You're right to draw attention to the problem with how this filing expectation works.

I imagine that many employers (and their payroll systems) are unaware a FPS is required each pay period for each employee/pension recipient and think that all they need to do is send a FPS file containing FPS records for those actually paid in the period. This misunderstanding may in part derive from HMRC persistently referring to the FPS as though it is a file rather than a record for each person. 

Perhaps employers should consider requesting a new PAYE scheme to distinguish between those with different payment frequencies? 

 

 

 

 

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By fozia
17th Jun 2015 13:39

Thanks Kate.  A simple

Thanks Kate.  A simple increase on the FPS filing deadline to 19th of the following month to fall in line with payment deadlines would go a long way in avoiding these penalty issues and having to waste time appealing them.  The 3 day easement is neither here nor there!

 

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By svend
28th Aug 2015 12:48

RTI Penalty Notices

We are a practice and have just received penalty notices for ALL our clients even though we filed the FPS on time. Has anyone else experienced this? We have written to HMRC with the proof received via email for the FPS having been sent on time but this will be a massive issue for HMRC if they have sent out incorrect penalty notices to a large number of companies incorrectly...

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By fozia
28th Aug 2015 13:07

RTI Notices

Yes the tsunami has started at our end too.  Not only are we having to waste time checking if any of these are incorrectly issued but we also are having to appeal them all regardless due to client frustrations.  PAYE is fast becoming the "speed camera fiasco" of the tax world.  The penalty regime does nothing to help employers manage their duties and we still have Auto enrolment to look forward to.

Surely an extension of the filing date to 19th of the month will make all of this disappear.  I do not know who exactly i supposed to be benefitting from the strict filing deadline in HMRC??!

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