The existing late payment penalty scheme for PAYE income under RTI has been extended to April 2017, following a review from HMRC.
The scheme was due to end 5 April 2016 but the tax authority decided to review the three-day easement and risk-assessed approach and continue the current scheme due to a significant reduction in late returns over the past year.
The automatic late filing penalty for RTI was scheduled to take effect from start 6 Oct 2014 for employers with 50 or more employees, and 6 March 2015 for all other employers.
However the automatic function was disabled and HMRC decided to risk-assess late filing penalties, especially with regards to small businesses and individuals.
The risk-based approach will continue, meaning that only employers who have persistently filed their full payment submissions (FPS) late for several months will be issued with a penalty – which can be appealed.
HMRC also will ignore all late filing of FPS made within three days of the payment due. This was introduced for FPS due on and after 6 March 2015, this has been extended to all FPS due before 6 April 2017.
However, taxpayers that regularly file after the statutory filing date but within this three-day period will be monitored and could be contacted by HMRC warning them of a penalty.
HMRC will continue to review their approach to PAYE late filing penalties beyond 5 April 2017 in line with the wider review of penalties and will continue to focus on penalising those who deliberately and persistently fail to meet statutory deadlines, rather than those who make occasional and non-deliberate mistakes.