New Real Time Information penalties
HMRC will soon start sending penalty notices to employers who make late RTI reports. We anticipate that many will be sent in error, but what should you do if you get one of these?
Employers and contractors who pay workers using the construction industry scheme are preparing for and expecting the first tranche of HMRC’s in-year penalty notices. From 6 October one will be issued where HMRC believes an RTI report is sent late. The notices will be posted to employers after the end of each quarter, that is 31 October, 31 January etc.
What counts as late?
An RTI report is late if it’s not made on or before the date on which an employee is paid. There are a number of exceptions to the rule. For example, the rule doesn’t apply to employers with nine or fewer people on the payroll. However, this exception only applies until 5 April 2016.
When taking advantage of a concession make sure you include the special code on your RTI report which tells HMRC why it’s late. If you don’t it will assume a penalty is due.
What is the penalty?
While there’s no penalty for the first late RTI report after 5 October, second and subsequent offences will result in a fine; the amount of which depends on the number of employees on your payroll. The minimum penalty is £100 and the maximum £400 for each report that’s late. Plus, if it’s still outstanding after three months a further penalty equal to 5% of the PAYE/CIS tax and NI due will be charged.
However, if you believe a penalty has been issued incorrectly it’s important that you act quickly to appeal against it otherwise HMRC can offset some of your next PAYE payment to cover the fine.
The quickest way to appeal is to do it online via HMRC’s website. Instructions on how to do this will be shown on the penalty notice.