The advent of Real Time Information (RTI) has seen fundamental changes to the way in which employers and pension providers report the payments and deductions they have made under PAYE.
The new system has been rolled out over a number of years, and HMRC has granted a number of concessions to businesses during the phasing-in period, most of which have now come to an end.
However, HMRC recently confirmed that it would be extending two of its more recent late filing penalty concessions for a further year.
Under the RTI legislation, employers must make a full payment submission (FPS) detailing payments made to employees on or before the date of payment – with businesses that fail to make their submissions on time being liable to automatic penalties.
Following the introduction of RTI, however, HMRC relaxed its late filing penalty regime in a bid to allow employers time to adjust to the new rules.
HMRC subsequently announced that it would be adopting a ‘risk-based approach’ to RTI late filing penalties, meaning that only those employers who have consistently filed their FPS late would be subject to a penalty. In addition, a ‘three day easement’ was introduced in 2015, applying to all FPS’s submitted within three days of the due date. This means that delays of up to three days after the statutory filing date are not liable to a penalty, although employers who consistently file within this three-day grace period will be monitored and may be considered for a penalty.
HMRC has confirmed that it will continue with the three day easement and risk-assessed approach until at least 5 April 2017.
RTI late filing penalties are set to be subject to significant reform from April 2017, as part of a wider review of penalties, with HMRC planning to maintain a focus on taxpayers who ‘deliberately and persistently’ fail to meet the deadlines, rather than those who make occasional, genuine errors.
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