HMRC to send in-year PAYE penalty notices
Taxman reverses policy of allowing monthly PAYE penalties to accrue before notifying employers
THE TAXMAN is to reverse its policy of sending out monthly penalty notices at the end of the tax year, Accountancy Age has learnt.
Currently, HM Revenue & Customs sends penalty notices for late monthly payments at the end of the year. This has been criticised by some groups because it punishes employers who have an unknown systematic error in their payment systems. As the employers only receive notices at the end of the tax year, mistakes that could be rectified easily are allowed to continue and the fines build up.
HMRC says that it does not know the total penalty until the end of the year. This is because the penalty rate depends on how many late penalties the employer had incurred throughout the year.
As part of the Real Time Information initiative, from October 2013, employers will be required to submit returns every month.
An HMRC spokesman told Accountancy Age that it will send the notices as and when they occur under RTI.
Tina Riches, technical director at the CIoT, said that currently HMRC does send out some letters saying there might be a penalty charged, but the letters are fairly vague.
“I think it will be a better system if HMRC sends notices in-year, rather than employers finding out 11 months later when it is impossible to make adjustments,” she added.