RTI late filing penalties extended to micro businesses

Small businesses are now eligible for fines applying to the late filing of PAYE submissions under the new Real Time Information (RTI) system.

Since last autumn, SMEs with 50 or more staff have been subject to penalties for the late filing of PAYE information via the RTI system.

Although HMRC initially intended employers with fewer than 50 employees to also face such fines, an extension to March 6 2015 was given to smaller businesses that required more time to adapt to the new arrangement.

However, this extension has now elapsed; meaning smaller businesses and start-ups are now eligible for the penalties. HM Revenue and Customs (HMRC) has confirmed there will be a three-day grace period for all employers before any late filing penalties are imposed; which is a much-needed concession for all firms.

The Chartered Institute of Taxation (CIOT) and the Low Incomes Tax Reform Group (LITRG) have both welcomed the three-day concession which mitigates a burden that would have hit the smallest firms hardest.

Patrick Stevens, tax policy director, CIOT, said: “Although there is no change to the actual filing deadline, which for the vast majority of employers still means a Full Payment Submission (FPS) should be filed on or before each time they pay their staff, this three day grace period is certainly a helpful concession.

“This comes in addition to the rules which stipulate that brand new employers can send their first submission within 30 days of first paying an employee without incurring any penalties.

“In all cases, the first late submission of the year is ignored. It is also the case that micro employers (those with up to nine employees) who commenced payrolls before April 6 2014, are essentially allowed to file monthly anyway until April 2016.

“Further relaxations recently announced include HMRC continuing to review late payment penalties manually, instead of imposing them automatically (as intended from 6 April 2015) and employers no longer needing to complete a set of year-end questions on the final FPS of the year, which in an effort to simplify the process, are disbanded from 6 March 2015.”