SME’s face late PAYE fines from 6th March

From 6th March 2015 small businesses with 49 or fewer employees will be fined if they report their PAYE late.

What do I need to submit?

You still need to process PAYE in the same way, but you will also need to make sure you submit your payroll information before you pay your employees. This all links back to the PAYE RTI (Real Time Information) penalties we wrote about last year.

This needs to be done using a Full Payment Submission (FPS), which can be generated with the help of payroll software.

If you don’t have to pay any of your employees for a particular tax month, you need to make HMRC aware of this or you could be fined. You should avoid a penalty as long as you send through an Employer Payment Summary by the 19th of the following month.

Being fined

If you do get fined due to late reporting of your PAYE, you will be fined monthly according to how many employees you have:

  • 1-9 employees – £100
  • 10-49 employees – £200
  • 50-249 employees – £300
  • 250 or more employees – £400.

If you do not pay your penalty within 30 days of receiving it you will begin to accumulate interest on the amount you owe.

Avoiding penalties

The best way to avoid these penalties is to ensure you complete the process properly, you need to:

  • Send your FPS on or before the earliest payment date
  • Use a late reporting reason code if necessary
  • Inform HMRC well ahead of time if you have made any changes to your payroll practices that may affect your ability to report on time

Appealing against a penalty

You do have the right to appeal against HMRC’s decision using their online service. If your appeal is seen as immediately legitimate, your penalty will be removed automatically.

You can appeal if you think that the penalty has been issued at the wrong time, the amount you are being fined is not correct or you have a reasonable excuse as to why the report was late in the first place.

Some recognised arguments for appeals are:

  • Incorrect data on the penalty notice
  • Death or bereavement
  • The report was filed on time
  • Fires, floods and other natural disasters
  • Theft or other crimes
  • There were no payments made to employees
  • IT failures.

If you are concerned how these penalties may affect you and want to know more please get in touch with our Payroll Team.