The new RTI PAYE system

Late returns 2012/13 and 2013/14

HMRC published guidance on how penalties for 2012/13 and 2013/14 will be applied where a return is late or inaccurate.

There will be no change to the penalties where returns for the tax years 2012/13 and 2013/14 are filed late. The current penalty regime will continue to apply at the tax year end. There will be no penalties if in-year Full Payment Submissions (FPSs) are submitted late.

Employers and pension providers must submit an FPS 'on or before' they pay an employee or pensioner. If they still have information to send after 5 April, they can send this on an FPS until 19 April, but then will use an Earlier Year Update after that. To avoid a late filing penalty for 2012/13 and 2013/14, they must report the final payment made to an employee or pensioner by 19 May following the end of the relevant tax year.

Inaccurate returns 2012/13 and 2013/14

HMRC will not charge penalties for inaccuracies identified on in-year FPSs for 2012/13. However, penalties may be charged after the end of the tax year, based on the final FPS for the year. So this means that the rules for getting it wrong for the year overall are very like the existing penalty rules for 2012/13.

Penalties for inaccuracies may apply to in-year returns from the 2013/14 tax year. HMRC will use the same considerations which apply now under Sch 24, Finance Act 2007 and continue to use a risk-based approach to identify employers who may be submitting incorrect returns.

Late payment of PAYE

PAYE and NIC must continue to be paid in full as they are deducted through the tax year. RTI submissions will make it very clear to HMRC how much it can expect from employers each month. Late payments will be very obvious. HMRC's guidance states the following:

Late payment penalties 2012/13 and 2013/14

For the tax years 2012/13 and 2013/14, HMRC will continue to use a risk-based approach to identify employers who are not complying with their payment obligations and who therefore might be liable to late payment penalties. Where employers who are not complying with their obligations are identified, late payment penalties may be charged.

HMRC will notify employers who may have defaulted on either a filing or payment obligation as soon as possible to enable them to get back to compliance quickly and avoid any further penalties for future failures.

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