5 Facts employers should know about reporting payroll information
Since 6 October 2014 employers with 50+ employees have been issued penalties from HM Revenue and Customs for reporting their payroll information late. On the 6 March 2015 a similar penalty was introduced for employers employing fewer than 50 employees. Here we inform you of the late/non filing PAYE penalties, the charges involved and how to avoid penalties in the future.
- When HMRC late/non filing penalties are issued
Penalties are issued
- for late filing of companies Full Payment Submission (FPS)
- You should send the FPS on or before your employees’ payday. You can send an FPS in advance if for example your payroll employee is on holiday. However, don’t send it too early as you will need to send a corrected FPS to HMRC in order for them to update any changes. Please note you can not send reports for the new tax year before March
- if the company did not send the expected number of FPSs
- if an Employer Payment Summary (EPS) was not sent when the company did not pay any employees in a tax month
- If you have not had to pay any employees in a tax month then do not send an FPS but send an EPS by the 19th of the following tax month and then HMRC will apply any reductions on what the company will owe from its FPS. Please note the tax month starts on the 6th of each month
Penalties will not be issued
- Between 6 March 2015 – 5 April 2016 if a company’s FPS is later but all reported payments on the FPS are within 3 working days of their employees pay day
- HMRC has also said that this three-day grace period starts from the beginning of the late filing penalty regime, i.e. 6 October 2014. Therefore if you employee 50+ employees and have received a penalty which was issued at the end of January 2015, then, if the return was filed within three days of the payment date, you can appeal online using the Penalties Appeals Service. Use the reason code “Other” and enter “return filed within three days”
- If you are a new employer and you sent your first FPS within 30 days of paying an employee
- If it is your fist failure to submit a report on time in the tax year
- This only applies to employers with 50+ employees
- And It does not apply to employers who are registered with HMRC as an annual scheme or if between the 2014/15 tax year the company employed less than 50 employees
2. Penalty Charges
The table below shows the penalty charges that apply; these depend on how many employees a company employee.
|Number of employees||Monthly penalty|
|1 to 9||£100|
|10 to 49||£200|
|50 to 249||£300|
|250 or more||£400|
Warning! If you are over 3 months late HMRC may charge an additional penalty of 5% of the tax and National Insurance that should have been reported earlier.
Warning!! If the company runs more than one PAYE scheme penalties can be charged for each
3. How to calculate what you might owe
If you fail to submit your FPS or EPS on time then specified charges will be issued. These are done on an estimation of how much HMRC thinks you should pay based on the company’s previous PAYE payment and filing history. If a specified charge is issued this doesn’t replace the need to file the FPS or EPS. To replace the charge you must submit the missing FPS or EPS for each month. Please note that if you send in updated year-to-date figures in your next FPS you will still be required to pay the specified charges but your accounting record will be adjusted to reflect the year-to-date figures filed in the later month.
4. What to do if you get issued a penalty
Penalty notices are issued by HMRC quarterly. A penalty notice will tell you what you owe, how to pay it and what to do if you don’t agree with the charge. Make sure you pay the penalty within 30 days as you will be charged interest after that. If you wish to appeal the charge then you can do this using HMRCs online service.
5. Make sure your reports are accurate
HMRC also issues penalties if careless or deliberate errors are discovered. These penalties are based on the behaviour that led to the error and the amount of potential lost revenue for that return.
If you realise that an error has occurred, despite taking reasonable care, then as long as you disclose the errors to HMRC unprompted then no penalty will be issued.