HM Revenue and Customs has softened its approach to strict enforcement of late filing penalties for full payment submissions (FPS) and announced that its three-day easement and risk-assessed approach to PAYE late filing penalties will now be extended until at least April 2017.
Why has HMRC decided to do this? Well, in 2015 HMRC conducted a thorough consultation on all of its penalties via a mixture of representative bodies, private companies, agents and individuals. Following the consultation there was general consensus that the focus should remain on persistent non-compliers, rather than those who might make an occasional honest error. It is believed that this arguably played a part in the softening of the approach to late filing penalties.
Initially, the fully-automatic late filing penalty regime for Real Time Information (RTI) was supposed to come into action from 6th October, 2014, for businesses with 50 or more staff and from 6th March, 2015, for all other employers. However, HMRC for one reason or another had a change of heart and instead opted to risk-assess all RTI late filing penalties.
So what is the position now for businesses? Well, the extension to HMRC’s risk-based approach now means that only those business owners who persistently file their FPS late for many months will be issued with a financial penalty. Employers will not incur late filing penalties for delays of up to three days in submitting PAYE information throughout the 2016-17 tax year.
Outlining the new position, an HMRC spokesperson said:
“The three-day easement is not an extension to the statutory filing date, which remains unchanged. Employers are required to file on, or before, each payment date unless the circumstances set out in the ‘sending an FPS after payday guidance’ are met.”
“HMRC won’t charge a late filing penalty for delays of up to three days after the statutory filing date. However, employers who persistently file after the statutory filing date but within three days will be monitored and may be contacted or considered for a penalty.”
What happens after the April, 2017 deadline has passed?
Well, HM Revenues and Customs has confirmed it will continue to review its approach to PAYE late filing penalties after the 5th April 2017 in line with the wider review of penalties, and will continue to focus on penalising those who deliberately and persistently fail to meet statutory deadlines, as opposed to those who make occasional, genuine mistakes. However, the belief and expectation among some industry insiders is that the format of all late filing penalties could be reformed for the next financial year.