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Late payroll reporting – penalties now in for SMEs

HMRC's six-month period of grace for SMEs has now expired, with penalties in force for employers who fail to report their PAYE information on time.

Julie Braithwaite, payroll specialist with Clayton & Brewill, explains the requirements.

Julie Braithwaite

Since October 2014, bigger businesses (those employing more than 50 staff) have had to report their PAYE information on time, or risk facing penalties.

Recognising that these new 'real time information' (RTI) requirements were quite a big step, HMRC gave smaller businesses (those employing fewer than 50 staff) an extra six months to get their processes and systems up to speed.

This six-month period expired on 5 March 2015.

—To meet HMRC’s requirements, you need to process your payroll in the normal way but you must also make sure you submit to HMRC your payroll and national insurance information at the end of each payroll run, via a Full Payment Submission (FPS).

If you have a month where you don't have any employees to pay then you still need to notify HMRC, and you do this by submitting an Employer Payment Summary (EPS). This needs to be in by the 19th of the following month.

Payroll information reporting – what can I be penalised for?

HMRC will issue penalty notices on a quarterly basis, detailing what you owe, how to pay it and what to do if you don't agree with the penalty.

You can be liable for a penalty from HMRC if:

– your Full Payment Submission (FPS) was late,

– you didn't send the expected number of FPS’s

– you didn't send an Employer Payment Summary when you didn't pay any employees in a tax month

You may not be penalised if:

– your FPS is late but all reported payments on the FPS are within three days of your employees' payday (this applies until 5 April 2016),

– you're a new employer and you sent your first FPS within 30 days of paying an employee,

– it's your first failure in the tax year to send a report on time

Are there any excuses for not submitting on time?

HMRC's website sets out a number of reasons where a business can appeal a penalty decision. These include:

– death/bereavement

– fire/flood/natural disaster

– ill health

– IT difficulty

– no longer having any employees

– no payments to employees

– theft/crime

Sometimes HMRC will issue a penalty notice in error. If you need help with checking or challenging a penalty notice, please contact me.

How much will I have to pay?

The penalty for late RTI returns depends on how many employees you have.

For companies with between 1 and 9 employees, the penalty is £100, and this doubles to £200 for companies with between 10 and 49 employees.

Interest will start to accrue after 30 days.

Need some specialist help or advice with your payroll?

It's a challenging time for payroll administrators at the moment: as well as the real time information requirements, many SMEs are having to get to grips with the new pension auto-enrolment rules. For help or advice with any aspect of your payroll, including RTI and pension auto-enrolment, please do get in touch and we'd be pleased to help.

Call Clayton & Brewill on 0115 950 3044 or send us an email.