Penalties: Pay-as-you-earn Tax (PAYE)

The following details explain the penalties for PAYE for late filing and related matters. 

Because of the introduction of real time information (RTI) for PAYE in April 2013 changes were made to the penalty regime for late and incorrect submission of employee PAYE information.

Penalties may be charged on the late filing of the final full payment submission (FPS) or employer payment summary (EPS) after 19 May following the end of the tax year. For 2012/13 and later years the penalty for late filing of employers returns is £100 per 50 employees for each month or part month that the return is outstanding.

An exception is made for late RTI reports made by micro employers, i.e. those with nine or fewer employees (including directors), up to 5 April 2016. They must however indicate on their report the reason for the late return.

Since March 2015 HMRC will accept that an employer automatically has a reasonable excuse for filing an RTI report no later than three days late and so no penalty is due. The concession was backdated to October 2014

The penalty will depend on the number of employees, as follows:
Number of employees
Penalty
1-9
£100
10-49
£200
50-249
£300
250 or more
£400

Penalty notices will be issued quarterly in July, October, January and April. These will show the penalty due for each month in the quarter.

Where a return is late for three months or more and the information it would have contained has not been included in a later return, an additional penalty of 5% of the tax and NI (that should have been shown in the late return) will be charged.

Penalties may also be charged where an underpayment results from the submission of an incorrect year-end return. This will be based on the concept of “potential lost revenue”.

We have created several posts surrounding Tax Penalties for further reading here.

For more information, we provide a Business Consultation to ensure our clients benefits from tax planning and accounting matters.

For any assistance contact Companies999, we will be happy to help you!

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