Small employers warned on RTI penalties

Small employers are warned they could face penalties if they fail to submit payroll details under the new Real Time Information (RTI) system.

Under RTI, employers must report the amount of money paid to staff either on weekly or monthly basis.  It was introduced in a bid to ensure changes to employees’ status are updated quicker and more easily.

RTI penalties came into force on 6 October for employers with more than 50 employees, and will be from 6 March 2015 for employers with fewer than 50 employees.

Employers will face a penalty if their Full Payment Submission (FPS) is late, they don’t send the expected number of FPSs or they don’t send an Employer Payment Summary (EPS) when they didn’t pay any employees in a tax month.

Penalties won’t be charged if an employer is new and sent their first FPS within 30 days of paying an employee, or if it’s an employer’s first failure in the tax year to send a report in on time (this doesn’t apply to employers with fewer than 50 employees for the tax year 2014-15).

Penalties differ depending on how many employees a firm has.  For one to nine employees the monthly penalty is £100, employers with 10 to 49 employees face a £200 monthly fine, those with 50 to 249 face a £300 a month penalty while employers with 250 or more employees face a £400 fine.

Employers who file their FPSs more than three months late will be charged an additional penalty of 5% of the tax and National Insurance that they should have reported.

Small employers need to be wary that even if they have not paid employees in a tax month, and think they have nothing to tell the RTI system, they can still get caught out with penalties.

If neither a FPS nor EPS is submitted, HMRC will raise a specified charge based on previous PAYE submissions; this may be significantly more than the actual PAYE payment figure, so it is crucial that employers submit RTI returns accurately and on time.

In addition, be aware that if employers run more than one PAYE scheme, they can be charged penalties for each.

Interest is also charged if penalties are not paid within 30 days of getting a penalty notice by HMRC.  The first penalty notices for tax year 2014 to 2015 will be issued in January 2015.

For information on RTI please contact Lorraine Wilkinson at the office.