Start date for small employer RTI penalties approaches

After an initial delay to allow smaller firms more chance to adapt to the RTI scheme, HMRC will begin issuing penalties to firms employing fewer than 50 people on 6th March 2015. Businesses employing over 50 people have incurred the same penalties since 6th October 2014 and, in just a few months time, smaller businesses will be brought into line.

The penalty system for smaller businesses was originally delayed amidst concerns about the rollout of the RTI scheme and the ability of smaller employers to become compliant on time. Speaking at the time of the delay, Ruth Owen from HMRC, said:

“Our most recent figures show that over 95 per cent of PAYE schemes making payments to individuals are successfully reporting in real time. We know that those who have had most difficulty adjusting to real time reporting have been small businesses, so this staged approach means they have a little more time to comply with the new arrangements before facing a penalty.”

Currently, employers operating under the system can receive penalties of up to £400 per month for larger employees (above 250), down to £100 for the smallest employers (between one and nine employees), who will join the system in March. The fines are sent out on a quarterly basis by HMRC.

HMRC has stated that it will impose penalties on employers if:

  • your Full Payment Submission (FPS) was late
  • you didn’t send the expected number of FPSs
  • you didn’t send an Employer Payment Summary (EPS) when you didn’t pay any employees in a tax month

There are still various exceptions in place, particularly for the smallest band of employers and an appeals process, should you believe you have been issued a penalty in error. Small employers are advised to ensure they are prepared well in advance of the March start date, however, and to consult their accountant if they have any concerns over the new system.

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