HMRC real-time PAYE penalties to hit from 2013/14

PENALTIES for late real-time PAYE submissions will not be charged by the taxman until April 2014 – however, errors will be penalised from next April, it has been confirmed.

For employers running real-time PAYE, no penalties will be imposed for late filing of returns for 2012/13 or 2013/14.

The current penalty system will continue to operate at the year end, with penalties charged if the information is not up-to-date by 19 May. There will be no penalties if in-year full payment submissions (FPSs) are submitted late.

For 2012/13, HMRC will not charge penalties for inaccuracies identified on in-year FPSs – but penalties may be charged after the end of the tax year, based on the final FPS for the year.

HM Revenue & Customs added there will be no automated late payment penalties until April 2014, and it will use the real-time system to collect late payments.

Real-time information will see PAYE reported on or before the date payment is made, while changes will be reported as and when they occur, rather than at the end of the financial year.

The system will require income tax deductions and national insurance contributions to be reported “on or before” the pay day.

CIoT technical director Tina Riches said the institute was disappointed penalties could be charged from April 2013 for errors found at the year end.

She said: “Under RTI it will often be the client themselves doing the regular submissions, so there may be more errors in-year than HMRC is used to seeing. It will be easy to make timing errors, which would be corrected before the year-end, until employers get used to the new system.

“In our view, in the first full year of RTI, penalties for errors should, as has happened in the pilot, only apply to errors on the final full payment submissions for the year. This would give employers a fighting chance of getting to grips with RTI before penalties start to bite. HMRC have still not provided a satisfactorily clear reasoning to justify starting in-year penalties from day one.”

Related reading