Employers given extra time before penalties introduced

HM Revenue and Customs (HMRC) has confirmed it will stagger the commencement of penalties after listening to customer feedback on Real Time Information (RTI) reporting changes.

Penalties for the new automatic in-year PAYE can be served for late filing, late payment and in-year interest. These were due to start from 6th April 2014, however with the staggered system now in place the only penalty that will apply in April 2014 will be for in-year interest on any in-year payments not made by the due date.

The amendments to RTI reporting has resulted in the need for employers to learn and adapt to new ways of managing their accounts; which in some cases has led to late payments and late filing with consequential penalties.
This new staggered approach allows employers the extra time to adjust to the changes, which has been needed in some cases.

The new schedule for 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

The return to reporting tax deductions when payments are made, rather than after the end of the tax year, enables the tax system to better ensure the right tax is being taken at source and is designed to reflect the fluidity of the 21st Century labour market.

HMRC’s Director General for Personal Tax, Ruth Owen, said: "The introduction of RTI is going extremely well for the majority of employers but there are still some who need a bit of time to adapt fully to the changes.

"This additional time will give us the opportunity to ensure that improvements to our internal systems are working, to learn from them and to provide better customer support to employers who need more time to adapt."

Last updated: 13th February 2014