RTI - Reporting, payment and penalties

The first year of reporting under real time is coming to an end and employers will be making final returns/submissions for the year. HMRC have issued guidance and reminders.

The following tips issued by HMRC consider FPS, EPS and highlight what to do if a return needs correcting:

  • “For most employers, the final Full Payment Submission (FPS) should be sent ‘on or before’ their last pay day of the tax year – which ends on 5 April;
  • Your final FPS (or Employer Payment Summary (EPS)) should indicate that it is the ‘Final submission for the tax year’ – and that means for the whole PAYE scheme. Remember that if your scheme covers more than one payroll – for example, a weekly payroll and a monthly one – only indicate that you are sending the final submission when the last FPSs for the tax year for all other payrolls have been successfully submitted;
  • Remember that, on the final submission, you have to complete the end of year questions and declaration. Before RTI, these appeared on form P35 and you had until 19 May to submit the form. Now, your final FPS or EPS should be submitted much earlier, so you may wish to make sure you have the answers to the questions in plenty of time for you to make that submission. Some employers and agents might want to start gathering that information now;
  • If you need to correct any of the information on your final submission, send a revised FPS as soon as possible – but definitely before 20 April 2014. This is because, from that date, we will start using it to work out peoples’ tax, National Insurance, Student Loans and Tax Credits. If you discover any errors in your final FPS on or after 20 April 2014, you must correct these by sending an Earlier Year Update (EYU);
  • If you want to avoid a late-filing penalty for 2013-14, you must submit your final FPS by 19 April 2014, or send an EYU to HMRC by 19 May 2014. You can send an EYU after this, but you may run the risk of a penalty, unless the EYU is submitted to amend your previously submitted final FPS figures;
  • Remember that if you do need to send an EYU, it should report only the differences to the latest amounts already reported for the tax year. For example, if a figure previously reported as £1,900 should have been £2,300, the EYU should show ‘£400’ – not £2,300. Similarly, if you want to reduce a figure previously reported as, say, £1,000 to £700, the EYU should report ‘-£300’ – with a minus sign in front – not £700.
  • You have until 31 May 2014 to give a P60 End of Year Certificate to any employees employed by you at 5 April”

Hours worked declaration

There is a change to the banding of the number of hours for an employee that is required to be included as part of the FPS submission. An additional banding is in place and the revised bandings for hours worked by an employee are: 

A) up to 15.99 hours

B) 16 to 23.99 hours

C) 24 to 29.99 hours

D) 30 hours or more

E) other. 

Scheme Contracted-Out Number (SCON)

Employers are legally required to show the SCON, in addition to the Employer’s Contracting-out Number (ECON), on their FPS for employees who have been in a contracted-out scheme during the tax year. As previously highlighted, a temporary dummy SCON can be used. HMRC has stated that ‘you must not, however, use the temporary dummy SCON as an automatic default’. 

Interest charges on late PAYE/NICs payments

For tax years 2014-15 onwards, HMRC will charge daily interest on all unpaid amounts from the due and payable date to the date of payment, and raise the charge when payment in full has been made. Check current and historic HMRC interest rates on late payments.

Preparing for April 2014 – rates and thresholds

After 6 April 2014, employers must ensure that payroll calculations for income tax and national insurance contributions (NICs) are done using the 2014-15 rates and thresholds. These can be found by following this link: Rates and thresholds for employers.

You can find more about the legislative changes, FPS and EPS submissions, how the employment allowance will be claimed and other RTI updates here

You may wish to join other accountants expressing views and considering solutions to filing and payment problems, such as the use of BACS, at http://www.payerti.org/