RTI penalties to be phased in

Employers are advised that the introduction of penalties for late filing and late payment in relation to Real Time Information (RTI) will be staggered, rather than coming into force in April as originally planned.

Automatic in-year Pay As You Earn (PAYE) penalties for late filing and late payment and in-year interest – charged on tax and national insurance contributions paid late during the year – were due to start from 6 April 2014.

However, HM Revenue and Customs (HMRC) says that having listened to customer feedback, it has now decided to stagger the start of the new in-year late filing and payment penalties to give employers more time to adapt to reportingpayroll information in real time and for HMRC to correct errors within the system.

The new timetable for the introduction of penalties will be:

• April 2014: in-year interest on any in-year payments not made by the due date

• October 2014: automatic in-year late filing penalties

• April 2015: automatic in-year late payment penalties.

HMRC says the introduction of RTI is going “extremely well for the majority of employers” but notes that there are still some employers who need more time to adapt to the changes. 

Under RTI, which came into force on 6 April 2013, employers are required to submit details of salary payments and deductions as they are made, rather than waiting until the end of the tax year. This must be done electronically.

This announcement will come as good news to many smaller businesses who may still be struggling to adapt to RTI.

However, this does not mean you should become complacent, as the new dates will roll around a lot quicker than you expect. Instead, this extra time should be used to seek professional advice to ensure you are fully up to speed with your obligations.

If you are still handling your own payroll then it may be a good idea to outsource this function to a dedicated payroll bureau, such as the one offered by your local accountant.  By doing so, you will save valuable time and resources which could be put to better use elsewhere in your business, while also enjoying the peace of mind that comes with knowing that your obligations under RTI are being taken care of.

For further information, please contact Lorraine Wilkinson at the office.