IN YEAR PAYE TAX PENALTIES
HMRC have confirmed that in-year penalties for late filing of the PAYE full payment submissions (FPS) will start from October 2014. The penalties are levied on a monthly basis at a fixed rate, starting from £100 for small employers.
An employer is required to file a FPS on or before each payday. The FPS will report the employee’s pay and deductions for that pay period. There are a number of exceptions where a FPS can be sent later. The most important of these is the exception for small employers, those with fewer than 10 employees. A full list of the exceptions can be found at: http://tinyurl.com/lexxvua. Where an exception is relied upon the relevant code (shown in the list of exceptions) should be recorded when making the FPS.
From 6 October 2014, penalties will start to be applied for late filing of the FPS. Only one penalty will be charged for each tax month, so if you have a weekly payroll, you will only have one penalty, however, many times your weekly FPS is late in the tax month. No penalty is charged for the first tax month in each tax year, where you are late, so the maximum number of penalties in any tax year will be 11.
The fixed penalties are based on the number of employees on the payroll, starting at £100 for up to 9 employees, £200 for up to 49 employees, £300 for up to 249 employees and £400 for payrolls of 250 employees or more. Penalty notices will be sent by post each quarter at the end of July, October, January and April.
If you have been regularly receiving the ‘generic notification’ messages telling you that your submissions are late or that you have not sent in the number expected, then you should review the operation of your payroll, as these messages will, from October, translate into fixed penalties.
If you need help in ensuring that your payroll is fully compliant, please contact us.