Sage Payroll error sees P35 returns filed incorrectly

SOME EMPLOYERS using Sage 50 Payroll software have received penalty warning notices after issues with the program resulted in the erroneous submission of P35 end-of-year filings.

Around 5,000 businesses submitted information through the real-time information (RTI) system, despite having not been on the pilot scheme, while another smaller group already using RTI have also been told they need to submit a P35 return.

The companies received penalty notices from HM Revenue & Customs as it failed to receive the correct information. A deadline of 25 June has been set for correct submissions to be made, with penalties to be applied for submissions made after that date. HMRC will arrange for penalties to be cancelled for employers who have recently filed their employer annual return.

Sage has told affected employers that did not take part in the RTI pilot that their submissions should have been rejected by the HMRC gateway. It added it is “working closely” with HMRC to understand how the issue occurred and has provided step-by-step instructions to ensure correct submissions can be made.

The software company said it has processed around 500,000 successful submissions.

Sage project manager for people products Jonathan Dowden told Accountancy Age: “We investigated straight away and through the investigation, we found there was a very small group who were not on the RTI pilot and submitted an RTI end-of-year routine to HMRC. HMRC then accepted that submission, which shouldn’t have happened because they weren’t invited to do so.

“There’s another group who were on the pilot, who submitted the RTI submission as they should have done, accepted by HMRC as they should have done, but have also received a penalty notice and told by HMRC when they queried it that they need to submit a P35.

“We’re working with HMRC on their [employers] behalf to effectively cancel any potential fines they think they’re going to get. We’re proactively calling customers and helping them put it right. HMRC understand this is a big change and as employers get used to submitting under RTI, these thing are going to happen and they’re taking a pragmatic view in relation to penalties on this.”

A spokesman for HMRC added:”We are aware that a very small proportion of employers, using products from one software provider, have received penalty warning notices from HMRC because they have not submitted their 2012-13 Employer Annual Return (P35 and P14s) by 19 May 2013.

HMRC is working with the software provider to identify all the employers who are affected by this issue. We appreciate that employers are still getting used to operating PAYE in real time and that mistakes may occur.

Employers who receive a penalty warning notice and meet the specific criteria should follow the guidance provided by their software provider and should submit their Employer Annual Return by 25 June 2013.”