Small employers won’t face automatic PAYE penalties
HMRC have announced that rather than issue late filing penalties automatically when a deadline is missed, they will take a more proportionate approach and concentrate on the more serious defaults on a risk-assessed basis.
This approach is in keeping with the likely direction of HMRC’s general approach to penalties, outlined in a recent discussion document and the department’s fresh approach to considering appeals against late filing penalties for Self Assessment.
Late reporting penalties already apply to employers with 50 or more employees, so this ‘risk-based’ approach will apply to submissions that were late from:
- 6 March 2015 for employers with fewer than 50 employees, and
- 6 January 2015 for employers with 50 or more employees.
HMRC will continue to issue risk-based penalties for the tax year 2015 to 2016 tax year.
According to the Revenue, they do not want to charge penalties, but rather want employers to report on time. It wants to help employers who are trying to do the right thing, rather than penalise them. Now there’s a novelty!
As with the recent relaxation of automatic penalties for late filing of Self Assessment tax returns, this approach will enable HMRC to concentrate more resources where they are needed, such as on the more serious failures to comply, and to focus on educating employers about their filing obligations through targeted communications, webinars and Employer Bulletin articles.
This latest announcement applies in addition to HMRC’s previous announcement that it will not be penalising minor delays of up to 3 days. The Revenue will monitor both, and review by April 2016.
Even if employers do not get a penalty, they are required by law to file on time and if they do not, may be charged a penalty on a future occasion.
Anthony Thomas, chairman of the Chartered Institute of Taxation’s Low Incomes Tax Reform Group welcomed HMRC’s approach saying, “HMRC’s announcement that they will accept reasonable excuses from taxpayers who are generally compliant without further probing is sensible, pragmatic and in line with what we have been calling for.”
“Fixed automated penalties make no distinction between the deliberate non-complier and the person who makes a one-off mistake. This is neither fair nor proportionate. It is good that HMRC have recognised this.”
This is only technically true, the actuality is very different. If you are late they will instead issue you with what they call an “estimated” bill. This isn’t actually estimated from previous fillings however, it’s a made up figure. In my case, all my previous fillings were zero, this bill was for many thousands of pounds. I should point out the missing filling was a result of a software glitch at their end too, one department could clearly see the record, another couldn’t.
They will then pursue you for this money just like any other unpaid bill, with threats of third party debt collection agencies coming to your premises (in my case my house) and seizing assets.
So whilst it’s true they might not issue you with a fine, what they actually do instead is far worse – at least in my case, many months of stress to get this sorted.