The penalty for a late P35 is £100 per month for up to 50 employees for each month the return is late.
This can only be reduced if the PAYE and tax due (this means the total tax due, not just the tax outstanding at the filing deadline) is less than the penalty issued.
The HMRC website explains this here www.hmrc.gov.uk/manuals/pommanual/PAYE51010.htm
You will see that if it is a nil return , or a return which shows total Tax and NIC on the return of less than £100 then the penalty is restricted to £100.
This will be useful for employers who have nil returns, or company directors who operate a PAYE scheme but pay no Tax or National Insurance.