HMRC confirms changes to RTI penalties

HM Revenue and Customs (HMRC) has confirmed that its three-day easement and risk-assessed approach to PAYE late filing penalties will be extended until April 2017 at the earliest.

HMRC has opted for a softened approach to late filing penalties for full payment submissions (FPS) under real time information (RTI) since the 2014-15 financial year.

Initially, the fully-automatic late filing penalty regime for RTI was supposed to come into action from 6th October 2014 for businesses with 50 or more staff and from 6th March 2015 for all other employers. However, HMRC has since opted to risk assess all RTI late filing penalties.

The extension to HMRC’s risk-based approach means that only business owners who have persistently filed their FPS late for many months will be issued with a financial penalty. Employers will not incur late filing penalties for delays of up to three days in submitting PAYE information throughout the 2016-17 tax year.

HMRC has confirmed it will continue to review its approach to PAYE late filing penalties beyond 5th 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, as opposed to those who make occasional, genuine mistakes.

Last year, HMRC conducted a thorough consultation on all of its penalties via a mixture of representative bodies, private companies, agents and individuals.

There was general consensus following the consultation that the focus should remain on persistent non-compliers, as opposed to those who might make an occasional honest error; and arguably played a part in the extension of the late filing penalty approach.

However, there is an expectation among some within the industry that the format of all late filing penalties could be reformed for the next financial year.

Date published 1 Jun 2016 | Last updated 1 Jun 2016