Reducing P35 penalties - no tax is due

I have not filed a P35 for a company PAYE scheme where all payments were below the Tax free and NI free thresholds. I recently received a large penalty of 800, can this be reduced?

1st February 2009

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

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.

By Jo Nockels

Disclaimer: The information provided is based on current guidance (at date of publication) from HMRC and may be subject to change. Any advice shared here is intended to inform rather than advise. Taxpayer's circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this information, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

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