From April 2013 employers will have to send HM Revenue & Customs their PAYE returns on a monthly basis; under a new regime known as Real-Time Information, or RTI. There are now new penalties (i.e. fines) that employers can face for sending in late returns; or inaccurate returns; or for making late payments.
Where a return is inaccurate then the tax based penalties can range up to a maximum of 100% of the amount of tax misreported. So if the amount of PAYE tax inaccurately reported was £10,000, then the penalty could be a maximum of £10,000.
If the relevant monthly RTI return, known as the Employers Full Payment Submission (FPS), is sent to the taxman after the monthly deadline: there can be a penalty of £100 for each 50 employees – for each month that the return is late. So if a return covered 70 employees, and was 3 months late, the penalty would be £600: and would be payable in addition to the PAYE tax itself and any interest charge for late payment.
There are also penalties that could apply even where the FPS returns are sent in on time, and are accurate, but the payment of the PAYE to HMRC is late. The amount of the penalty is a percentage of the tax paid late and depends on the number of other late payments made in that tax year. It can be up to 4% of the tax paid late, and is payable in addition to the PAYE tax itself and an interest charge. So if the tax for any one month was £10,000 and it was paid 2 days late then it could trigger a penalty of up to £400, which would be payable in addition to the tax of £10,000 and any interest charge.
What does this mean for me?
All employers need to understand their obligations under RTI and file PAYE returns accurately, and on time, and also pay the PAYE tax over on time. If you do not do so you may be liable to penalties. Penalties can be reduced for a number of reasons: including the quality of your disclosure, or if you have a reasonable excuse.
How can Lynam Tax Enquiry Experts help me?
If you or your business is being charged a penalty by HMRC in respect of Real Time Information then Lynam Tax Enquiry Experts can review the position and advise you if the penalty is correct. Sometimes HMRC will get this wrong. Additionally, our tax enquiry experts have a huge amount of experience in negotiating penalties with HMRC, and can frequently negotiate a reduction to the penalties being charged: sometime getting them waived entirely.
For immediate help and advice telephone:
Andrew Nutbrown: 0771 877 8710
Paul Lynam: 0845 643 9997