We should all be aware by now that, under RTI, payments must be reported to HMRC and payment made to HMRC on or before the date that a payment is made to employees.
HMRC have relaxed the penalties regime for 2012/13 and 2013/14 to allow a bedding-in period and the situation for those two years is as follows:
2012-13: For the tax year 2012-13, HMRC will not charge penalties for inaccuracies identified on in-year FPS. But penalties may be charged after the end of the tax year, based on the final FPS for the year.
2013-14: Penalties for inaccuracies may apply to in-year returns from the 2013-14 tax year. HMRC will use the same considerations which apply now under Schedule 24, Finance Act 2007 and continue to use a risk-based approach to identify employers who may be submitting incorrect returns. HMRC has, however, announced a relaxation penalties for late in-year FPS submission for small employees, i.e. less than 50 employees. However, if the year-end submission is late, penalties will apply.
The amount of penalties for late FPS submissions is as follows:
| Number of employees | Amount of penalty per late FPA submission |
|---|---|
| 1 to 9 | £100 |
| 10 to 49 | £200 |
| 50 to 249 | £300 |
| 250 or more | £400 |
2014-15: The above penalties will apply for employers of all sizes.
It is also worth re-capping the penalty system for late payments of PAYE.
Late payment penalties apply in the following circumstances:
The penalties for in-year late payments are as follows:
| No of times payments are late in a tax year | Penalty percentage | Amount to which penalty percentages apply |
|---|---|---|
| 1 | No penalty | Total amount that is late in the tax year (ignoring the first late payment in that tax year). |
| 2-4 | 1% | Total amount that is late in the tax year (ignoring the first late payment in that tax year). |
| 5-7 | 2% | Total amount that is late in the tax year (ignoring the first late payment in that tax year). |
| 8-10 | 3% | Total amount that is late in the tax year (ignoring the first late payment in that tax year). |
| 11 or more | 4% | Total amount that is late in the tax year (ignoring the first late payment in that tax year).
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If an in-year payment is more than six-months late, there will be a penalty of 5% on the unpaid amount.
If the payment remains outstanding for more 12 month after the due date, there will be a further penalty of 5% on the unpaid amount.