Real Time Information – penalties
It is now a year since the majority of employers began using the Real Time Information (RTI) system and more than 99% of PAYE records are currently being reported in real time. From 6 April 2014, interest charges will be applied for PAYE that is not paid by the due date.
HMRC has also announced the stagger of the start of the new in-year late filing and payment penalties to give employers more time to adapt to reporting in real time. From October 2014 there will be automatic in-year late filing penalties and from April 2015, automatic in-year late payment penalties.
Under transitional arrangements, employers must report their PAYE information to HMRC by 19 May 2014 at the latest to avoid an end of year late filing penalty for 2013/4. Until 19 April, employers can do this on a Full Payment Summary. After this date an Earlier Year Update must be used (and submitted by 19 May to avoid a penalty). Penalties are calculated on the basis of £100 per 50 employees for each month (or part month) until the final submission is received by HMRC.
There is also a relaxation until April 2016 for micro employers (defined as employers with nine or less employees) who find it difficult to report every payment to employees at the time of payment. This extends the deadline to report PAYE information to on or before the last payday in the month, rather than every payday. Businesses must still report through the RTI system but have an extended deadline. However, all employers, regardless of size, who are already using payroll software products or HMRC’s Basic PAYE Tools to report PAYE on or before the date they pay their employees should continue to do so.