HMRC postpones RTI late filing penalties for small firms
Posted on in Business News , Political News
From 1 October the vast majority of UK employers could incur fines from the taxman for late returns under the Real Time Information (RTI) system. However, HMRC has announced that firms with 49 or fewer staff will be exempt from penalties until March 2015.
HMRC introduced real time reporting in 2013 for the largest employers but has since been rolled out to cover all UK companies. Although micro companies - those with nine or fewer employees - are exempt from filing returns in real time, they do still have to complete their returns using the RTI system and will still be caught by the penalty regime if they fail to file in their agreed time scale with HMRC.
The RTI reporting initiative originally required all employers to provide information about tax and National Insurance deductions every time they paid an employee, rather than annually, by October this year.
However after many small businesses complained they were not ready to implement RTI, HMRC decided to postpone penalties until next year.
Simon Denton, Tax Partner at Milsted Langdon, said: "HMRC's announcement means that until March 2015, small businesses will be allowed to submit PAYE information on a monthly basis.
"However while small firms have been given a period of grace, we would still recommend they get into the habit of submitting information to HMRC on or before payments so they do not fall foul of penalties from March 2015.
"Small business should ensure that they have the mechanisms in place to be RTI compliant now before it's too late.
"It is also worth reminding employers with more than 50 employees that they will still be fined if they file PAYE returns late after the October 6 deadline."
In announcing the deferral of penalties for small firms, Ruth Owen, HMRC's director-general for personal tax, said: "We know from our experience of rolling out of RTI that to ensure a smooth transition for our customers it's best to introduce changes in stages. This will allow us to update our systems and enhance our guidance and customer support as needed.
"We know that those who have had most difficulty adjusting to real-time reporting have been small businesses, so this staged approach mean they have a little more time to comply with the new arrangements before facing a penalty."
For more information on complying with Real Time Information requirements, visit the HMRC website