HM Revenue & Customs (HMRC) has announced that a grace period of several days will be granted to firms with 50 or fewer employees, if they have late Pay As You Earn (PAYE) submissions.

Rather than automatic penalties being issued for the late filing of PAYE submissions, three days will be allowed before a penalty is charged. Companies with a workforce of 50 or less, will be subjected to late filing penalties from 6th March 2015.

HMRC has confirmed that the penalties will be issued on a risk assessed basis. The organisation will also be taking action to prevent penalties being issued to those companies with a PAYE scheme that seems to be redundant. According to HMRC, around 15,000 schemes need to be closed down, as they haven’t been required to submit a report since April 2013. The schemes that are involved will receive notification, informing employers of any action they may need to take and what to do if they should be operating a PAYE system.

As HMRC moves towards a digital future, the organisation is calling for volunteers to become involved in a consultation about the application of penalties. It is aware of the issues affecting UK SMEs and is taking action to tackle some of them. Owners of small businesses will be consulted on ways to differentiate between those who deliberately break the rules and those who occasionally make simple mistakes.

Business owners who have been charged a penalty for late filing for the period 6th October 2014 to 5th January 2015 can appeal to HMRC, if they filed within three days of the deadline.

Duties for PAYE

For the purposes of PAYE, a month runs from the 6th to the 5th. Specialised software should be used to record and calculate pay and deductions for employees. A payslip should be produced for each employee showing full pay and deductions. A Full Payment Submission (FPS) has to be submitted to HMRC on or before the pay date.

With the new month beginning on the 6th, the payment due from the last month’s FPS will be displayed online by the 12th of the month. Any reductions you are claiming should be reported to HMRC on an Employer Payment Summary, which should be done by the 19th. Payment has to be made by the 22nd of the month, but penalties will be charged if the submission or payment is more than three days late.

For advice on penalties and how to avoid them, contact us here at The Accountancy Partnership.

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Karl Bilby

We work very closely with our expert accountants to bring you the latest factually correct tax and accounting news. We also enjoy writing about small business news that we hope you find useful!

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