Previously, PAYE late filing penalties only applied if the end of year return was late. However, under Real Time Information PAYE returns are now required ‘in year’ (generally at least monthly) and as a result tax law has changed to allow HMRC to charge automatic penalties for the late filing of these in year PAYE returns.
The new regime started on 6 October 2014 for employers with 50 or more employees with smaller employers being liable for the penalty from 6 March 2015. An employer who, during a tax month, fails to make a return on or before the filing date is liable to a penalty as follows:
- 1-9 employees – £100
- 10-49 employees – £200
- 50-249 employees – £300
- 250 or more employees – £400
However, the automatic nature of the penalties is not in line with the likely direction of HMRC’s general approach to many of its penalties, as outlined in a discussion document which it issued earlier this year. Rather than issue late filing penalties automatically when a deadline is missed, HMRC will take a more proportionate approach and concentrate on the more serious defaults. A more targeted approach means HMRC can focus ‘on those determined to bend or break the rules’.
This new approach will apply to all employers but HMRC will review the new approach by April 2016.
Please note, the deadlines for sending PAYE information stay the same, including the requirement to send PAYE information on or before the time that employees are actually paid or due to be paid. So it is important to ensure that PAYE matters are completed on a timely basis and we are happy to assist in this area.