Overview of Real Time Information penalties

HMRC has a system whereby it charges a penalty if a document isn’t filed within the specified time limits, if an error has been made that is considered to be careless, if a tax bill isn’t paid on time and in the event of many more scenarios besides. Real Time Information (RTI) was introduced to all employers from 5th April 2013. Penalty charges have now been introduced and come into force for most employers in 2014-15.

What is RTI?

RTI was introduced to simplify the operation of PAYE filing. Rather than employers having to submit an end of year form to HMRC and forms that indicate an employee has either started or left employment, information is submitted to HMRC RTI Penalties every time an employee is due to be paid.

What will penalties be charged for?

A Full Payment Submission (FPS) has to be sent to HMRC either before or when an employee is paid, stating the amount paid along with tax and other deductions. At the year end, rather than having to submit a P35 end of year form and P14s to HMRC, the employer submits an FPS. If this is not submitted, HMRC will charge a penalty.

If PAYE is paid late, a penalty will be charged. If a FPS or an Employer Payment Summary is submitted late, a charge will follow too, along with a penalty for any in-year forms that are either filed late or not at all.

If any mistakes are made when completing and submitting the returns, a penalty will be charged too.

When will penalties come into force?

HMRC has introduced a new timetable of penalties and when they will be issued, taking into consideration the difficulties that may be experienced by smaller companies when trying to incorporate the new Real Time Information system. If you file in-year reports late and you are an employer with 50 or more employees, penalties can into effect as of 6th October, 2014. Employers with fewer than this won’t be charged penalties until 5th March, 2015. Micro employers with fewer than 10 employees will experience relaxed reporting rules until April 2016, although the guidance is still being looked at.

Missing the final submission of FPS will result in a penalty being charged at £100 for every 50 employees. Any errors or mistakes made on returns will be charged a penalty in 2014-15. If PAYE is not paid on time, a penalty will be charged, with in-year penalties being automatically charged from April 2015.

RTI penalties are complex and you may want to seek professional advice.