RTI penalties - HMRC announces a relaxation of penalties

HMRC has made the following announcement:

"Having listened to customer feedback, HMRC has decided to stagger the start of new, automated, in-year late payment and filing penalties, to give HMRC and employers more time to adapt to reporting in real time. 

The vast majority of employers are now routinely reporting PAYE in real time and most of them – around 70% - have told us that it is either very or fairly easy.  

However, we appreciate that operating PAYE in real time remains a big change, with both HMRC and employers continuing to learn and adapt to it. 

We know that it is important to monitor changes carefully and to give them time to bed in and work properly.  So we understand the concerns we’ve heard about introducing automated in-year penalties in 2014-15 while we are all continuing to learn and improve.

We have therefore decided to introduce the new penalties in stages:

  • April 2014; in-year interest on any in-year payment not made by the due date 
  • October 2014: automatic in-year late filing penalties.
  • April 2015: automatic in-year late payment penalties

We have announced the new timetable in a press release today. Please bring this to your clients’ and members’ attention .

We will be updating our guidance shortly.


Late filing

Introducing in-year late filing penalties from 6 October means that employers who bring all their submissions for the period 6 April - 5 October 2014 up to date by 5 October will not face any in year late filing penalties.

This additional time will:

  • Give those employers who will be reporting on or before payment for the first time or who join RTI in April 2014, more time to adapt. 
  • Allow customers and HMRC to test and get used to the new FPS ‘Late Reporting Reason’ data item. This will allow employers to tell HMRC why they are submitting data late – for example if they are correcting an earlier submission.

We are working closely with the Department for Work and Pensions so that our approach to ensure that employers send their PAYE information on time supports Universal Credit. Reporting on or before the date employers pay their employees is necessary to ensure an accurate Universal Credit award. 


Late Payment

Introducing automated in-year late payment penalties from April 2015 will help those employers, who are trying their best to comply, but are still having difficulties reconciling what they think is due each month with what we think is due.

Again learning from experience, we are currently reviewing the main causes of difficulties and misunderstandings and enhancing our systems, for example, to automatically correct some types of common employer errors. 

These enhancements will provide additional safeguards which, together with updated guidance, should bring improvements by summer. 

Please note however:

  • We will still issue late payment penalties manually for 2014-15 as we have done in previous years. 
  • In-year interest will apply on all amounts unpaid by their due date from 6 April 2014 as planned. As with other taxes, HMRC will calculate interest daily. HMRC won’t seek payment of interest until the debt is settled. 

However, employers will be able to see the amount of interest accruing on the Business Tax Dashboard and on any letters we send seeking payment of the underlying unpaid amount.


Generic Notification Service (GNS) messages

We have heard the concerns you have expressed about the accuracy, timing and wording of some of our GNS messages.  Given the extended timetable for the introduction of penalties, we have decided to suspend the issue of our late payment and non-filing GNS messages until April 2014 to allow us to make some further improvements to the messages while still allowing employers to get the benefit of the GNS notices ahead of the introduction of penalties.  


Other points to note

Employers may still be charged a late filing penalty if they do not comply with their obligations relating to the final return of the 2013-14 tax year. There’s more information at www.hmrc.gov.uk/payefinalsubmission and we will be publishing a separate What’s New about this shortly. 

We appreciate that the vast majority of employers try their best to file and pay on time. And because we want employers to pay and file on time correctly, we understand that it is important to make sure all the changes that reporting in real time brings are working properly before we start to introduce penalties. But to be fair to all our customers, HMRC will take robust action to collect genuine debt. The introduction of in-year interest on in year late payments from April 2014 will support this. "