HMRC Issues RTI Penalty Deferral Generic Notification Messages

As you will be aware, HMRC have delayed the automated penalty regime for late filing of the Full Payment Submission (FPS) for some employers. The penalty regime will be phased as follows:

Employers with fewer than 50 employees will face automated in-year penalties for late FPSs from 6 March 2015
Those who employ 50 or more people will face penalties from 6 October 2014.

HMRC began to send Generic Notices Service (GNS) messages to those employers that they consider to have at least 50 employees on 21^st September. These are the employers they consider to be potentially liable for automatic late filing penalties from 6^th October 2014.

There are no automatic late filing penalties prior to 6^th October.

In case employers have not seen this message we repeat it here:

This message is to let you know when in-year filing penalties for tax year 2014-15 could arise if you fail to file your Full Payment Submissions on time or you fail to send us the expected number of returns. We have identified you as having 50 or more employees or pension recipients. This means that in-year filing penalties will apply to you from 6 October 2014. To avoid these penalties, you should make sure all your real time returns are fully up to date by 5 October 2014 and ensure that in future your returns are sent on time and are complete. However, no penalty will arise for the first month in each tax year where there is a filing failure. Details of how filing penalties will operate can be found here www.gov.uk/what-happens-if-you-dont-report-payroll-information-on-time. If you haven’t already done so, we strongly recommend that you set up email reminders to alert you when a notification has been issued using the options available in PAYE Online.

The first penalties will not be applied until January 2015 after the third quarter of the year has ended.

It is important that any employer who has received one of these messages and believes they have been wrongly categorised should contact HMRC (see Further Information below). On the second Saturday of each tax month HMRC will re-assess the number of employees in a PAYE scheme before issuing any penalties. This means that an employer initially categorised as having 50 or more employees may well not receive a late filing penalty if HMRC re-categorise them as having fewer than 50 employees.

HMRC are not stopping there. They will send an additional letter to any ‘large’ employer they believe has been guilty of late filing in the period leading up to October 2014 albeit no penalties will actually be issued.

Employers must remember that the ‘on or before’ rule for the FPS means on or before the date reported on the FPS as the payment date, which is not always the actual date the employee is paid.

So, what about small employers with fewer than 50 employees? There is a different GNS that has been sent to these employers:

In-year filing penalties start 6 Mar 15

This message is to let you know when in-year filing penalties for tax year 2014-15 could arise if you fail to file your Full Payment Submissions (FPS) on time or you fail to send us the expected number of returns. We have identified you as having 49 or fewer employees or pension recipients. This means that in-year filing penalties will apply to you from 6 March 2015. To avoid these penalties, you should make sure all your real time returns are fully up to date by 5 March 2015 and ensure that in future your returns are sent on time and are complete. You may be charged a penalty for not sending your FPS on time or failing to send the expected number of returns between 6 March 2015 and 5 April 2015.

Please note that as part of the phased introduction of the new filing penalty regime you do not qualify for the unpenalised failure for the tax year 2014-15. Details of how filing penalties will operate can be found here www.gov.uk/what-happens-if-you-dont-report-payroll-information-on-time.If you haven’t already done so, we strongly recommend that you set up email reminders to alert you when a notification has been issued using the options available in PAYE Online.

CommentThis is signalling the end of a relatively confusing period, where employers may have been at risk of being lulled into a sense of false security. Whilst we believe that HMRC are not always free from criticism themselves, it is important that employers make sure that they have secure procedures in place to ensure that they comply with the ‘on or before’ rules. In this regard, we are pleased to see that their latest guidance does make reference to this in bold. This is thanks to continuing lobbying by Learn and a large contingent of other payroll and software professionals.

Employers should also make sure that they complete the Late Reporting Reason on the FPS if they do submit returns late.

Further Information