HMRC delays in-year RTI penalties for small business

HMRC has announced that it is to defer the in-year penalties for late real time PAYE returns until March 2015

The announcement means that those employers with 50 or more employees will face penalties from 6 October 2014 while those that employ fewer than 50 employees will face penalties from 6 March 2015.

The tax department said that it will communicate details of when penalties will apply to employers, based on the number of employees on its records, through electronic messages.

The new in-year penalties will be issued quarterly, with the first penalty notice being issued early in 2015. They replace the end of year penalties, which apply up to the 2013-14 tax year.

HMRC will issue end of year penalties for employers who it believes failed to send their final submission for 2013-14 on time later in September 2014.

HMRC director general for personal tax Ruth Owen, said that the department’s most recent figures show that over 95% of PAYE schemes making payments to individuals, are successfully reporting in real time, with 70% reporting that it is easy to do.

Figures released by HMRC show that up to 19 May 2014, the tax department successfully received 35.4m Full Payment Submissions (FPS) and 742m payments for 2013-14. Some 99.5% of individual PAYE records are being reported in real time. Some 1.8m (95%) of PAYE schemes with employees/ pensioners are reporting over 99% of individual PAYE records.

‘We know from our experience of rolling out of RTI that to ensure a smooth transition for our customers it’s best to introduce changes in stages. This will allow us to update our systems and enhance our guidance and customer support as needed.

‘We know that those who have had most difficulty adjusting to real-time reporting have been small businesses, so this staged approach means they have a little more time to comply with the new arrangements before facing a penalty.

‘We believe this is the best approach for HMRC and our customers, as we all get used to the new in-year penalties,’ said Owen.

Where employers believe they have a reasonable excuse for sending a return late, they will be able to appeal using HMRC’s new, online appeals process for automated penalties. This should speed up the appeal process for businesses and HMRC.

In the run up to March 2015, HMRC will examine other ways to encourage employers to comply with the rules, in addition to financial penalties.

More information about the new in-year penalties is available at

Further information about operating PAYE in real time is available at

Penny Sukhraj |Content editor, Accountancy - (up to 2016)

Penny Sukhraj, former content editor and writer for Accountancy and Accountancy Live, responsible for commissioning and editing news...

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