What you should know about late filing penalties for Pay As You Earn (PAYE)

/ Posted By - Bradleys Accountants / Categories - Advice for Small Businesses

With HM Revenue and Customs (HMRC) already issuing late filing penalties for Pay As You Earn (PAYE) since January 6 2015 for employers with 50 or more employees and since March 6 2015 for employers with less than 50 employees, why should this article have any relevance? The reason to continue reading is because this article will highlight what HMRC’s true intentions are behind the recent announcement around leniency for occasional late reporters.

The introduction by HMRC of issuing “risk based” penalties means they are able to divert their attention to some of the more severe wrongdoers. HMRC has stated that their focus has shifted from minor indiscretions by individuals and small businesses to more substantial misconduct. However, this does not mean that they have adopted leniency with anyone who has missed the tax filing deadline without a good reason. In fact, as an employer if you are over 3 months late in filing your FPS you will be charged an extra 5% of the tax and National Insurance that ought to have been reported. An employer can expect a penalty if they do the following:

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    • Full Payment Submission (FPS) was late
    • Expected number of FPS’s was not sent
    • Did not send an Employer

    Payment Summary (EPS) when you did not pay any employees in a tax month
    The following table outlines how much of a penalty is charged in regards to the number of employees employed in a business:

    Number of employees

    1 to 9
    10 to 49
    50 to 249
    250 or more

    Monthly penalty


    The prevalent application of automated penalties is part of HMRC’s design to integrate the use of digital technology (particularly the internet) to its overall functions. Actually this is the first year they have added the feature that anyone can renew their tax credits online, which they have been pushing for. HMRC ultimately want to be in a position where all PAYE filings will be completed and submitted online only. What is even more fascinating is that HMRC is proposing to sooner or later be capable of monitoring patterns of conduct so they may only target persons and businesses who repeatedly fail to pay or send their tax returns on time. Once again this will allow them to apply their resources to pinpoint major players in tax evasion.

    The point HMRC is attempting to make is that they are not overly concerned if a tax filing is occasionally late, instead they would rather focus their attention on the serial offenders. In conclusion as an employer and individual it really pays to be up to date with your records and make sure all filings are submitted in a timely fashion.

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