RTI compliance: my latest Accounting web blog

if you’re struggling to keep up with the RTI penalty regime, and who could blame you it’s changed so often, my latest blog for Accountingweb (reproduced below) might help

I’m a trusting soul, so when I was told by HMRC that the April Employer Bulletin would clarify what the PAYE penalty regime is now, I believed them.

I was also told it would be issued the first week of the tax year so I was relieved when at last it popped into my inbox in the second week of the month and then immediately felt disappointed when I read it. Not only was there no clarity on the penalty announcement of 17th February there was yet another round of employer and agent bashing with the theme of you ‘clearly still don’t know how to operate the PAYE system under RTI’.

So given there will be nothing else official until purdah is lifted just what is the RTI compliance regime at the moment?

It is now too late to send a final FPS or EPS declaration for 2014/15 – that deadline was 19th April so an automatic penalty under Schedule 55 FA 2009 would now be levied for any scheme that has not sent a declaration

We’re now in EYU (Earlier Year Update) territory and will be for the whole of 2015/16. Originally HMRC said any EYUs should ideally be completed by 20th May to allow year end reconciliations and the ensuing P800s to be complete, but that was before the advent of duplicate records. Now it is HMRC staff that tends to ask employers and agents to send EYUs as often as them being generated from our side. Of course often this brings with it the ‘can’t tell, won’t tell’ scenario.

The disputed charges team within HMRC, in an effort to untangle a corrupted FPS, ask the agent or employer to send an EYU. The employer or agent says ‘that’s difficult as I have correct reconciled figures for that year at my end but if you tell me what figures you have I’ll try to send an EYU, perhaps via the BPT, to get you back to where we think month 12 should be’, ‘Oh no’ say HMRC ‘we can’t tell you what figures we have’, so given the EYU is designed to be a +/- correction file it is impossible to send a correction if you don’t know what the target is! HMRC did agree in December last year that the EYU needed redesigning to be a positive file i.e. along the lines of perhaps re-sending the month 12 FPS to reinstate the correct YTD figures but as yet there seems little progress on this.

Late and non-filing penalties now apply to all schemes with a 3-day tolerance that will apply for the whole of 2015/16 (HMRC have confirmed that to me but I was hoping to see that published in the Employer Bulletin as the 17th February press release gave a start date  but not an end date for the tolerance). The tolerance also applies to GNN warning messages so from March 2015 these will only be sent if any payment date in the FPS is more than 3 calendar days prior to the actual FPS filing date and there is no late reporting reason set against that date to extend the 3-day tolerance. Non-filing warnings can also be received for not sending enough FPS as per the scheme’s filing expectation (at least one is expected per tax month for a monthly scheme and four for a weekly)

Appeals via the online Penalties Appeals Service (PAS) are the appropriate route for all schemes with 50+ employees who filed up to 3-days late between October and February, as the tolerance was only implemented from March 2015 onwards to suppress warnings and penalties.

Penalties for Month 12 (schemes with less than 50 payees) and the January – March quarter for larger schemes, will not be issued until late May for some reason even though the quarter ended on 5th April – well I can think of a reason as I’m sure you can!

If a client has paid a penalty for October – December before the easement was announced and the easement now applies to their failure i.e. up to 3 days late, they are now due their money back, that will be an interesting debate I’m sure and I have a client in that situation

Late payment penalties have been downgraded from automated to risk-assessed and will only be issued for underpayments in excess of £100

So it’s au revoir to 2014/15, well until the penalties come out at the end of May and the P800s in June!

 

I’m a trusting soul, so when I was told by HMRC that the April Employer Bulletin would clarify what the PAYE penalty regime is now, I believed them.

I was also told it would be issued the first week of the tax year so I was relieved when at last it popped into my inbox in the second week of the month and then immediately felt disappointed when I read it. Not only was there no clarity on the penalty announcement of 17th February there was yet another round of employer and agent bashing with the theme of you ‘clearly still don’t know how to operate the PAYE system under RTI’.

So given there will be nothing else official until purdah is lifted just what is the RTI compliance regime at the moment?

It is now too late to send a final FPS or EPS declaration for 2014/15 – that deadline was 19th April so an automatic penalty under Schedule 55 FA 2009 would now be levied for any scheme that has not sent a declaration

We’re now in EYU (Earlier Year Update) territory and will be for the whole of 2015/16. Originally HMRC said any EYUs should ideally be completed by 20th May to allow year end reconciliations and the ensuing P800s to be complete, but that was before the advent of duplicate records. Now it is HMRC staff that tends to ask employers and agents to send EYUs as often as them being generated from our side. Of course often this brings with it the ‘can’t tell, won’t tell’ scenario.

The disputed charges team within HMRC, in an effort to untangle a corrupted FPS, ask the agent or employer to send an EYU. The employer or agent says ‘that’s difficult as I have correct reconciled figures for that year at my end but if you tell me what figures you have I’ll try to send an EYU, perhaps via the BPT, to get you back to where we think month 12 should be’, ‘Oh no’ say HMRC ‘we can’t tell you what figures we have’, so given the EYU is designed to be a +/- correction file it is impossible to send a correction if you don’t know what the target is! HMRC did agree in December last year that the EYU needed redesigning to be a positive file i.e. along the lines of perhaps re-sending the month 12 FPS to reinstate the correct YTD figures but as yet there seems little progress on this.

Late and non-filing penalties now apply to all schemes with a 3-day tolerance that will apply for the whole of 2015/16 (HMRC have confirmed that to me but I was hoping to see that published in the Employer Bulletin as the 17th February press release gave a start date  but not an end date for the tolerance). The tolerance also applies to GNN warning messages so from March 2015 these will only be sent if any payment date in the FPS is more than 3 calendar days prior to the actual FPS filing date and there is no late reporting reason set against that date to extend the 3-day tolerance. Non-filing warnings can also be received for not sending enough FPS as per the scheme’s filing expectation (at least one is expected per tax month for a monthly scheme and four for a weekly)

Appeals via the online Penalties Appeals Service (PAS) are the appropriate route for all schemes with 50+ employees who filed up to 3-days late between October and February, as the tolerance was only implemented from March 2015 onwards to suppress warnings and penalties.

Penalties for Month 12 (schemes with less than 50 payees) and the January – March quarter for larger schemes, will not be issued until late May for some reason even though the quarter ended on 5th April – well I can think of a reason as I’m sure you can!

If a client has paid a penalty for October – December before the easement was announced and the easement now applies to their failure i.e. up to 3 days late, they are now due their money back, that will be an interesting debate I’m sure and I have a client in that situation

Late payment penalties have been downgraded from automated to risk-assessed and will only be issued for underpayments in excess of £100

So it’s au revoir to 2014/15, well until the penalties come out at the end of May and the P800s in June!