DMBM519505 - Debt and return pursuit: PAYE RTI: penalties: late-filing penalties

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Employers should file a Full Payment Submission (FPS) on or before their employees’ payday. However, there are some exceptions when they can send a late FPS report.

If they have not paid any employees in a tax month they should send an Employer Payment Summary (EPS) by the 19th after the tax month they did not pay any employees, ensuring that they have set the ‘No FPS Due’ signal.

Employers who file the FPS or EPS on time will not be charged a late-filing penalty (LFP). Schedule 55, section 106 provides the legislation for the provision of a penalty for failure to comply with this requirement.

The value of the penalty charged is based on the number of live employees for that scheme when the default is created.

Number of employees Amount of penalty
1 to 9 £100
10 to 49 £200
50 to 249 £300
250 or more £400

Filing penalties apply on a monthly basis but will be issued quarterly. A penalty notice can contain a penalty for more than one tax month. The penalty charge is the sum of the value of penalties included in the penalty notice. At the end of each quarter the Penalty and Appeals System (PAS) looks for any active defaults that have not yet been penalised and decides whether it could charge a penalty. RTI 511 Notice of penalty assessment letters are issued on or around the 22 July, October, January or April.

Please note that ETMP may indicate that an FPS has been submitted on time. However, only PAS will show if this was indeed after the employees had been paid thus justifying the issue of a LFP.

First three quarters of 2014-15

During the first three quarters of 2014-15, ETMP raised LFPs automatically for employers who failed to file, or were late filing their returns to HMRC. This took effect from:

  • 6 October 2014 for employers with 50 or more employees
  • 6 March 2015 for employers with 49 or fewer employees.

A one-off message via the Generic Notification Service (GNS) was issued to all employers to let them know which segment they fell into in the three weeks leading up to 6 October 2014. For further information see PAYE5055.

Late-filing and non-filing failures were still created for employers who had 49 or fewer employees but the creation of any penalties was deferred until 6 March 2015. For month 12 if there was a filing failure, a default was created and one filing penalty was charged. There was no first un-penalised default for these employers in 2014-15.

No penalties for short PAYE filing delays from March 2015

There is no change to the filing deadlines; however, employers will not incur penalties for minor delays of up to three days in filing their PAYE information.

The last quarter of 2014-15 and 2015-16 onwards

PAYE filing penalties now apply to all employers regardless of the number of people they employ. HMRC took a risk-based approach when selecting employers for 2014-15 quarter 4 filing penalties and for 2015-16 filing penalties and will continue to take this approach. Generic Notification Service (GNS) messages continue to be issued to all customers who report their payroll information late or fail to advise HMRC when they're not paying individuals.

Appeals

Employers and their authorised agents will be able to appeal their penalties using the Penalty & Appeal Service (PAS). Guidance can be found in Appeal against a penalty (GOV.UK).

Every default has a unique identifier (ID) that must be used externally (by employers and agents) as part of the online appeals process and internally (by HMRC) to manage defaults, penalties and appeals. Each penalty is identified by the unique ID attached to the default that gave rise to the penalty. The filing default range (unique ID) will start at 6,000,000,001. The unique ID will be shown on the RTI511.

Exceptions

A penalty will not be charged in the following circumstances where:

  • the EBS filing Inhibition Signal is or was set during the quarter
  • the scheme has ceased
  • the potential cessation signal is set
  • a ‘period of inactivity’ or ‘no payment due’ signal has been set
  • it is an excluded scheme type.

If the RLS signal is set, a penalty is created on PAS but a penalty notice is not issued until the RLS signal is unset. The PAS system will automatically assess and release penalties relating to the period during which the RLS signal was set.

IDMS

The reference for a PAYE In-Year LFP work item is made up of a reference number and ASN; for example, “123 P 1234567 YYYYLF MM” where:

  • 123 P 1234567 is the Accounts Office reference
  • YYYY is the tax year end
  • LF is the In-Year LFP identifier
  • MM is the quarterly instalment and ranges from 01 to 04 with 01 relating to quarter 1, 02 relating to quarter 2 and so on.

The LFP is interest bearing. Where the interest charge for the late payment of the LFP is sent to IDMS, the reference will be the same as the LFP work item but will end with the letter X.