The New RTI Penalty Regime

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The New RTI Penalty Regime

You might have noticed the the Taxman has gone penalty-crazy over the last few years, levying fines for the late submission of all kinds of obscure forms, frequently adding insult to injury by charging daily penalties for continued non-compliance.  
Therefore, you might be interested, but not surprised, to know that your payroll submissions from March 2015 will start to attract penalties under a new RTI penalty regime.  So, as an employer what do you need to know?

 Penalty changes under the new RTI penalty regime.

Automatic in-year penalties for late RTI reports have been in place for employers with 50 or more staff since October 2014.  However, starting from 6 March 2015 a new RTI penalty regime will also apply for those with less than 50 workers. The only exception to this is employers with less than 10 employees on their payroll; in-year penalties won’t apply to them until April 2016.

Tax tip:- If you are an employer with less than 10 employees you have another year to make sure your payroll system is working efficiently; but be prepared for the new RTI penalty regime to be extended to your business from April 2016.

Penalty notices.

The Taxman has started to send out penalty notices to employers in the 50 plus employees category who have submitted two or more late RTI full payment submissions (FPSs) since October 2014.  For second and subsequent late FPSs, the penalty charge is a minimum of £100 and a maximum of £400 depending on the number of employees. Plus, where a report is made more than three months late, a further fine equal to 5% of the PAYE/CIS tax and NI due on the report is payable.

Tax tip:-  If you receive notice of a penalty that you don't think is due you can appeal against it. The easiest and quickest way to do this is to use the Taxman’s online penalty and appeals service here.

Penalty triggers.

Penalty notices will be sent automatically if the Taxman’s computer thinks an RTI report is late or has been missed. For this reason we expect to see a wave of incorrect notices following the end of each tax month. While you can appeal against an incorrect notice, it’s better to avoid the hassle in the first place.

Tax Tip:- Even if you make no payments of salary etc. for a tax month, the Taxman’s system assumes that an FPS is required unless you tell it that there’s nothing to declare.  To avoid a penalty notice submit an employer payment summary as soon as you know an FPS is not needed.

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