This article was first published in the January 2012 UK edition of Accounting and Business magazine.
The majority of employers will be submitting PAYE information in real time by April 2013. Please do not underestimate the difficulties and time required. Even those who have received face-to-face support in the pilot have reported difficulties. With so little time for business to prepare, make sure that you get the basics right. Also, remember that the guidance and information issued by HMRC is not static.
In February HMRC plans to send all employers a follow-up letter confirming when they are expected to start making real-time submissions.
You will start to report PAYE information in real time in April 2013 unless HMRC has agreed a different date with you.
June to September 2013
If you have schemes with 5,000 or more individuals and are not already reporting in real time before April 2013, HMRC will work with you to agree a start date. The expectation is that this will be between June and September.
Universal Credit will be introduced by the Department for Work and Pensions.
HMRC has stated its position on the penalty regime, issuing What happens if you don’t report payroll information on time for 2012–13 and 2013–14, the latter period being the first year of RTI. HMRC continues to highlight the importance of the timely receipt of the full payment submission (FPS) each time a payment is made to an employee, as well as reminding employers that FPS will be used to update individuals’ tax contributions and student loan deduction records.
Late and inaccurate returns
HMRC has issued the following note:
Late and inaccurate returns for years 2012–13 and 2013–14.
There will be no change to the penalties for late filing of returns for the tax years 2012–13 and 2013–14. The current penalty regime will continue to apply at the year end.
HMRC wants employers to file on time and does not want to issue penalties. Employers will not be charged penalties for sending FPS late, apart from the final FPS for an employee in the tax year. This means for these years, employers operating PAYE in real time will be in a similar position to employers still operating traditional PAYE.
To ensure that employers operating PAYE in real time are treated consistently with those operating traditional PAYE, HMRC will allow certain limited easements for tax years 2012–13 and 2013–14 as follows:
No penalty will be charged for late filing if the final FPS for an employee is submitted by 19 April. You cannot submit an FPS after 19 April.
After 19 April, you can submit an Earlier Year Update (EYU) by 19 May and avoid a penalty.
If you do not report the final payment made to an employee, for the tax years 2012–2013 and 2013–2014, by 19 May in the following tax year you will be charged a late filing penalty as now.
Penalties are calculated on the basis of £100 per 50 employees and accrue for each month (or part month) that a return remains outstanding after 19 May.
If you fail to report this information by 19 May or tell HMRC no return was due by sending an EPS, they will write to you (and your authorised agent if you have one) advising that a penalty may already have been incurred and that you must report this information as soon as possible to prevent the penalty building up any further.
If your return remains outstanding for more than four months, you’ll receive a penalty notice shortly after 19 September and, if necessary, the following January and May. These will show the amount of penalty that’s building up because you haven’t sent your returns on time and tell you how to pay it.
HMRC will continue to use a risk-based approach to identify employers they think may be submitting incorrect returns. Where HMRC discovers an error, the penalties that could apply will be based on the behaviour that led to the error and the amount of potential lost revenue for that return, as now. Errors that arise despite taking reasonable care attract no penalty at all and penalties for errors due to failure to take reasonable care can be reduced to zero with full and unprompted disclosure to HMRC.
Employers operating PAYE in real time in 2012–13 will not be charged a penalty in-year for inaccuracies on FPS returns submitted each payday. But penalties may be charged after the end of the tax year based on the final FPS for the year. This will ensure employers joining the pilot are treated in line with other employers.
If an inaccuracy is discovered in FPS returns submitted during the tax year 2012–13, the employer will be instructed to correct the inaccuracy in the next FPS. HMRC will contact the employer in writing to tell them to show the correct pay and deductions in all subsequent FPS, including the final FPS for the tax year.
For tax year 2013–14 an inaccuracy in any FPS submitted could attract a penalty. It will be based on the potential lost revenue for the FPS that was incorrect. The penalty will be charged under Schedule 24, Finance Act 2007. HMRC may issue one penalty notice for multiple inaccuracy penalties in a year.