One-man bands get respite from RTI penalties

One-man bands and other small employers will be exempt from being issued with automated PAYE real-time information (RTI) late filing penalties until March 2015, the taxman says.

Such Pay As You Earn penalties for filing late with HM Revenue & Customs had been due to come in next month, representing a delay from the initially intended month of April.

But now HMRC has put the start date back again, albeit only for so-called 'small employers' -- those with 49 or fewer staff, as the new penalty commencement date for them is March 6th.  

The remainder of employers (those with a workforce of 50 or more) still need an asterisk by this October, specifically the 6th, as automatic in-year penalties for them go ahead from then.

Tax bodies endorsed the delay for small firms, saying it was right of HMRC to recognise that the least resourced firms deserve extra time to get to grips with RTI before being penalised.

The Revenue confirmed: “Those who have had most difficulty adjusting to real-time reporting have been small businesses, so this staged approach means they have a little more time to comply with the new arrangements before facing a penalty.”

The Charted Institute of Taxation said the additional months before the penalty regime is rolled out universally should please the Revenue too, as “wrinkles remain” in the RTI system.

“HMRC still has work to do in ensuring the accuracy of automated generic notification messages to employers,” explained the institute’s Colin Ben-Nathan.

“An improvement in the accuracy of the late filing, non-filing and late payment messages would not only reduce the volume of penalties issued in error by HMRC, but would also reduce the number of appeals that inevitably result from this.”

These notifications will reach all employers “shortly,” when the taxman alerts them to when penalties will apply to them, based on the number of their employees shown in his records.

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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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