RTI late filing penalties from October

Employers should be aware that automatic penalties will apply if their RTI submissions are not up-to-date by Sunday, 5 October 2014 - and thereafter kept up-to-date. These penalties will be in addition to the automatic interest charge which has applied to late payments since April this year. Penalties will be imposed:

• Where a Full Payment Submission (FPS) is filed late - that is to say, is not filed by the day the employees are paid or, if the employer qualifies for the concession for some employers with nine or fewer employees, by the last pay day in the tax month; and

• Where an employer fails to file a nil Employer Payment Summary (EPS) - for a month in which no payments to employees were made - by the 19th day of the following month (so by 19 October for the tax month to 5 October).

The monthly penalty will be £100 if the employer has less than ten employees; £200 if he has between ten and 49; £300 if he has between 50 and 249; and £400 if he has 250 employees or more. However, the first default each tax year will be ignored. 

Penalty notices will only be issued every three months. It appears that the first penalty notices will be issued in October 2014, to cover any defaults for the current tax year that were not rectified by Sunday, 5 October.

Where a submission is three months late, HMRC will additionally be able to impose a 5% surcharge on the tax and National Insurance contributions payable. They say that this will be used ‘only for the most serious and persistent failures.’

From April next year, the screw will be tightened yet further, with the existing penalties for late payment of monthly or quarterly PAYE remittances being made automatic and applied in all cases. The penalty will be between 1% and 4% of the tax due, depending on how many times, in the tax year, the employer pays late.

Further Developments.......

HMRC has announced that the introduction of automatic penalties for late RTI submissions will be delayed another five months for small employers.

Under the revised timetable announced back in February, automatic penalties were due to start from 6 October. This date will still apply for companies that employ 50 or more people, but smaller companies will get an extra five months until the automated regime starts to bite from 6 March 2015. 


The Revenue said it will send electronic messages to all employers shortly to let them know when the penalties will apply to them, based on the number of employees shown in the department’s records.

RTI - HMRC make a small concession

HMRC has bowed to pressure and will allow some employers more time to submit their RTI reports.

PAYE Real Time Information (RTI) is mandatory for employers from April 6. Since this date, each time you pay an employee you must report their earnings and the corresponding tax and NI contributions to HMRC no later than when you pay your workers. However, it's now offering a little leeway.

HMRC's press release of March 19 is worded a little oddly; it says that employers with fewer than 50 employees can defer making their RTI reports until "the date of their regular payroll run but no later than the end of the tax month (5th)".

In practice. Tax months end on the 5th of the month. Therefore, HMRC is saying that if you pay your workers weekly, say on a Friday, then for the April tax month paydays will be the 12th, 19th, 26th plus May 3. You must make an RTI report for these by no later than May 3, but only where this is the date on which you work out the total tax and NI payable for the month for each employee. If you run a full payroll earlier, then a report will be required at that time.

The RTI reporting concession is short lived. Only payments to employees up to and including October 5 are covered. Thereafter, every time you make a payment you must submit an RTI report.

Under current rules employers, no matter how many workers they have, don't have to make an RTI report for certain one-off or unusual payments until they make their main payroll run.

Are you ready for RTI?

What is RTI?

Real Time Information, or RTI, is a new system that's being introduced by HMRC to improve the operation of Pay as You Earn (PAYE). PAYE information will be collected more regularly and more efficiently when employers submit their regular payroll submissions.

How will it affect me?

Inevitably as HMRC streamline their operations the burden of reporting will fall on the employer.  Instead of sending information once a year at Payroll Year End, you'll need to submit information electronically to HMRC for PAYE, NIC and student loans etc. every time you pay your employees.

When will it happen?

Businesses will receive a letter from HMRC in January or February 2013 informing them of their start date.  For most this date will be April 2013 with everyone switching over by October 2013 in time for the introduction of the governments new Universal Credit.

What are my options?

If you run your own payroll system, you need to get RTI-enabled software in order to send your PAYE information to HMRC online every time a payment is made. You can do this in three ways:

1. Using commercial payroll software, upgrading your existing software if necessary (your provider can advise on this).
2. Using a payroll service provider, such as an accountant or a payroll bureau, who will do it for you.
3. Using one of the free payroll software packages or HMRC’s free Basic PAYE Tools, available to those with nine or fewer employees.

What do I need to do?

Don’t leave the preparation until the last minute.  There are actions you need to take and probably additional information you need to obtain from your employees.

• Make sure all your employee information (name, date of birth, gender, address and valid National Insurance number) is accurate and up to date.
• Register for PAYE Online, if you have not done so already.
• From April 2013, you will need to include new information in your payroll records, such as hours worked. You will need to complete employee information for temporary and casual workers and employees paid below the National Insurance Lower Earnings Limit.
• You should look at how operating PAYE in real time may affect your business more widely. For instance, you may need to change some of your procedures for starters and leavers. 

What next?

Before you ‘go live’ HMRC will perform a Payroll Alignment process by asking you to supply an extract of your payroll data in order that they can update their records to match yours.  You will then be ready for your first real time submission.

How we can help….

We are RTI ready; our payroll department can guide you through the requirements ensuring a smooth transition to the new system.  If you need assistance setting up, advice on the technicalities or would like us to run your payroll for you, please contact us on 01395 516658.