PAYE penalty reforms ‘too little, too late’

THE MOVE to issue penalties for late PAYE payment automatically is too little too late, advisors have said.

Accountancy Age yesterday revealed that HM Revenue & Customs will inform employers immediately if they have filed their PAYE return or payment late. This is part of the real time information initiative that will make it compulsory for employers to file returns at the same they pay staff.

Currently, HMRC sends penalty notices at the end of the year. This has meant that some employers have built up fines without realising it.

Although the change – due to come in June 2013 – has been welcomed, advisors have said this has been brought in too late. John Whiting, tax director at the CIoT, said employers will have learnt their lessons by then, after paying huge fines.

“This new penalty kicked in this year in respect of the past tax year so businesses have found out about it over the past six months,” Whiting said. Employers who play late are in the wrong, but they should have got a warning immediately, he added. Now they are facing fines for 12 months last year at a higher rate, and for around six months this year.

“They will have mended their ways by next year. Introducing a proper warning next year is to a degree after the horse has bolted,” Whiting said.

Julian Sims, tax director at HJS Accountants, said: “I’m disappointed with the fact it seems to be viewed as a penalty raising measure rather than a way of changing behaviour.

“In-year penalties would change behaviour. It might be harder to issue automatic penalties until RTI but it is not impossible. You have a process that chases for collection – therefore it is possible to raise a flag that someone has paid late.”

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