HMRC has confirmed that from 6 March 2015, small businesses with fewer than 50 employees will be given a three-day grace period before penalties are imposed on them for late filing of PAYE submissions. However, there won’t be any changes to the filing deadlines. Businesses will still be required to file on or before each payment date unless the circumstances set out in the “sending an FPS [Full Payment Submission] after payday” guidance apply.
Automatic penalties for late payments were due to start from 6 April, but HMRC said it will now review these on a risk-assessed basis, instead of issuing them automatically.
To further prevent the number of unnecessary PAYE penalties issued, HMRC has also confirmed that it will, in the coming weeks, shut down up to 15,000 PAYE schemes that haven’t made a PAYE report since April 2013 and which appear to have been terminated.
HMRC said, “We recognise that RTI is a relatively new highly digital system and that although the majority pay and file on time, some employers are still adapting,”
In due course, HMRC will notify the affected schemes of the planned shutdown and what needs to be done if they still want to operate PAYE.
A discussion consultation has also been issued that seeks views on potential policy improvements to better target the penalty regime. The aim is to find out if HMRC can better differentiate between persistent and deliberate non-compliant taxpayers and those who err occasionally.
Late last year, HMRC’s director-general for personal tax, Ruth Owen, had said, “We know that those who have had the most difficulty adjusting to real-time reporting have been small businesses, so this staged approach means they have a little more time to comply with the new arrangements before facing a penalty.”
The consultation is open until May 11, following which HMRC will review the operation of the changes to the PAYE penalties by 5 April 2016.