HMRC Softens Stance On Late PAYE Filing Penalties And Gives SMEs An Extended Period Of Grace.

It may not be Christmas, but it would appear that some element of festive spirit is still alive and well at HMRC.

With the new PAYE submissions date imminent, HMRC has announced that small businesses with fewer than 50 employees will be granted three days’ grace for late PAYE submissions before penalties will be imposed. It may not be much, but as accountants we know that every little helps when times are tough.

HM Revenue and Customs (HMRC) has now confirmed that the PAYE late filing penalties will apply to employers with fewer than 50 employees from 6 March 2015. What’s more, HMRC has also softened its stance on automatic fine penalisation for late filing and revealed that late payment penalties will continue to be reviewed on a risk-assessed basis in the coming months.

Why has HMRC changed its mind?

Well, it appears the tax authority has decided it was counterproductive to issue unnecessary PAYE penalties.So in a bid to prevent this, HMRC has confirmed it will be shutting up to 15,000 PAYE schemes in the coming weeks that have not been required to make a PAYE report since April 2013 and appear to have terminated. HMRC will subsequently notify the affected schemes to inform them of the planned closures and what to do if they should still be operating PAYE.

HMRC has also published a discussion document to source views on any potential improvements to the way in which PAYE penalties will apply for failure to pay outstanding fees or to meet deadlines for returns or registration in the future. The reason for this is most likely the growing reliance on technology: with HMRC delivering more digital-based services for customers, the tax authority is looking to gather opinions on the important issues which affect SMEs across the UK.

The vast majority of HMRC’s customers meet their obligations in full and on time, so it appreciates that its approach for the small minority of people and businesses who fail to meet these obligations needs to work better.

That is why the tax authority is consulting small business owners on new ways to better differentiate between deliberate and persistent non-compliance and oversight or error. It believes that in the case of error or oversight, alternative interventions may well be more appropriate.

HMRC is seeking opinions from accountants and organisations involved in the financial service industry.

Any taxpayer, tax credit claimant, agent or representative body wishing to submit an opinion on the matter or get involved in the discussion on HMRC penalties can send an email response or write to the tax authority at:

HMRC, Tax Administration Policy, Room 1C/06, 100 Parliament Street, London SW1A 2BQ.

If you would like more information on the changes to PAYE, then contact Steven Glicher accountants on 0161 485 8007 or email

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