We end this summer not with a bang but a whimper of frustration over HMRC’s changing practices which affect you and your clients. First, we have a work-around for one of the software errors which is blocking online filing of the SA tax return. We review the circumstances in which PAYE penalties will be issued in 2017/18, and finally we have an update on the information which HMRC refuses to provide to tax agents.

Below is just an extract from last week’s tax tips email. To receive the full email when it is published each Thursday, simply follow the link on the right (or below, if you’re reading this on a mobile device).

PAYE late filing penalties

We summarised the position for late filing PAYE penalties in our newsletter on 20 April 2017. This information related to the 2016/17 tax year, but we now have a further statement from HMRC regarding how they will assess PAYE penalties for 2017/18.

The full payment submission (FPS) report is supposed to be filed on or before the day which is the earlier of:

  • the day on which employee actually gets paid;
  • date on which employee becomes entitled to his pay.

Say the employee becomes entitled to his pay on 28th of each month, but in August the payroll was run and payment was made on 29th as 28 August was a bank holiday. In that case the FPS sent on 29 August is deemed to be late as it was submitted after the day on which the employee became entitled to his pay. This rule applies even if the employee was actually paid late, i.e. on 29 August.

In 2016/17 HMRC introduced a three-day grace period for filing the FPS, and in the Employer Bulletin issue 67 they explain that this three-day grace period will continue to be applied for the whole of 2017/18. This is not an extension of the filing period. That “on or before” deadline remains as described above. It represents HMRC turning a concessional blind-eye to marginal and occasional lateness by the employer. If the employer persistently files the FPS late, but within 3 days of the due date, he will receive an online penalty warning from HMRC and be considered for a penalty.

It’s worth reminding clients that late filing penalties start at £100 per month for the smallest payrolls, and rise to £400 per month for payrolls with 250 or more employees. One late filing within the tax year is permitted before any penalty is assessed.

The first PAYE penalties for 2017/18 will be issued in September 2017 for the PAYE periods ending in the quarter to 5 July 2017. Penalties are sent to employers by letter, not by email or GNS message (the electronic messaging service within PAYE online). However, an appeal against the penalty can be submitted through PAYE online, or by letter.

You can appeal on behalf of your client, but don’t forget to take a screen-print of the appeal including the reasons given as there is no print function in the online appeals mechanism.