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RTI penalties delayed for small employers

19 September 2014 By Gill

A small reprieve for small employers

HMRC announced a further postponement of RTI penalties – but only for employers with fewer than 50 staff. Larger employers are subject to “in-year penalties” from October 2014, whereas small businesses have until next March.

The move came after extensive lobbying by employers and the payroll industry, worried that HMRC’s systems just aren’t up to the job.

Filed Under: compliance

How to avoid HMRC penalties

16 September 2014 By Gill

HMRC uses penalties to encourage compliance. There are 2 types to watch out for.

Payment penaltiesmissed payment

Pay on time

There are deadlines for paying your taxes. If you’re late in paying, expect to receive a penalty. You may also be charged interest every day until you pay the bill.

Pay electronically

Cheques can get lost in the post. Paying electronically e.g. via online banking is quick and easily trackable.

Use the right reference

However you pay, always include your accounts office reference, otherwise your money will end up in an HMRC slush fund instead of being correctly applied against your account!

Filing penalties

File on time

You must report Pay As You Earn (PAYE) wages in “real time” – in other words, on or before payday.

Weekly, fortnightly, monthly, whatever. Every time someone gets paid through payroll, you must tell HMRC.

File accurately

That’s why it’s so important that you tell us – in advance – about any changes to your payroll.

You may have to prove to HMRC that you weren’t careless in making an error.

 

More on filing penalties

Filed Under: compliance Tagged With: HMRC

What to do if HMRC say you owe PAYE

17 June 2014 By Gill

Had a letter from HMRC’s Debt Management division? Don’t blindly pay it.

letter from HMRC Debt Management

So far this week, 3 of our clients have called us about letters from HMRC telling them they owe £100s.

All complete nonsense.

And it’s only Tuesday. <Sigh>

1. Check what you should have paid

Ask your payroll provider for a P32. This is simply a list of all the payments that you should have made to HMRC.

For example:

  Pay Period  Amount Due to HMRC for Period
     Quarter 1 total 295.92
     Quarter 2 total 75.48
     Quarter 3 total 112.29
     Quarter 4 total 180.96
Year Total 664.65

2. Check what you actually paid

This means going through your bank statements and finding every payment to HMRC. Note how you paid it: online, cheque, debit card etc. Note down the date that the money left your account, as well as the amount paid.

The total of all your payments should be the same as the Year Total on the P32.

If it’s not, then you either overpaid or underpaid somewhere along the line. Work out when and where.

3. What to look for

Page 2 of the letter is the statement of liabilities – pictured below. Look at the total unpaid amount. Sometimes it’s obvious that a payment has gone astray – if your cheque for £45.32 hasn’t cleared, and the statement says you owe £45.32, job done. Others take a bit of investigating.

Dates are key. I can’t stress that too highly.

Late payments cause the most common problem. When you pay late, HMRC will allocate the payment to the wrong period.

For example, look at the handwritten notes below. You can see that our client pays PAYE quarterly. Accordingly he made 4 payments, which each match the P32 above.

 

HMRC statement of liabilities

 

But now focus on when those payments were made. £180.96 was paid on 7 May. Not only was that late – it should have been paid by 19 April – but critically it was the last payment for the 2013/14 tax year.

Paying it late meant that HMRC automatically took it into the 2014/15 tax year.

4. Do your sums

To check your payments, first knock off any interest that HMRC have added, because the payments you are looking for obviously don’t include that.

So we’re actually looking for £256.61 minus 17p interest = £256.44

We’ve figured out from the payment dates that £180.96 must have been allocated to the new tax year. That leaves £75.48. Ring any bells?

Yep, it’s the payment made on 6 November.

5. Call HMRC

This is usually the painful bit, involving a good 20 minute wait to speak to someone. But funnily enough, when you ring Debt Management division, you often get through straight away.

The first thing they ask is, “Are you making a payment?”

This is where you laugh and say, “No, cos I don’t owe you anything.”

 

laughing cat

Filed Under: compliance

What will flexible working mean for you?

31 May 2014 By Gill

The law on flexible working is changing, and employers must be ready.

Your long-standing employee Jo is a budding stand-up comic. She’s got a regular late-night gig at a comedy club 50 miles away, and is finding it tough to get up and start work at 8am the next day. She comes to you, asking for a 10am start one day a week.

How would you handle her request?

What is flexible working?

Flexible working can include:

  • Part-time or term-time working
  • Job-sharing
  • Flexitime
  • Compressed hours
  • Working from home
  • Career breaks

How is the law changing?

From 30 June 2014, all your employees have the right to request to work flexibly, not just those with children.

You must consider requests in a reasonable way and tell employees of your decision within three months.

What’s in it for me?

Employers will benefit from increased productivity, lower labour turnover, and reduced absenteeism. The government expects economic benefits of about £47m a year.

A survey by Kingston University found that workers on flexible contracts are more emotionally engaged, more satisfied with their work, more likely to speak positively about their organisation and less likely to quit.

Grounds for refusal

  • Burden of additional costs
  • Inability to reorganise work among existing staff
  • Inability to recruit additional staff
  • Detrimental impact on quality
  • Detrimental impact on performance
  • Detrimental effect on ability to meet customer demand
  • Insufficient work for the periods the employee proposes to work
  • Planned structural change to the business
As Jo’s boss, you know that your customers expect someone in the office from 8am, so you ask for volunteers.

Brian leaps at the chance. Starting early and finishing early will cut his childcare costs, so he’s happy to take Jo’s place when she has a late gig the night before.

Result = 2 ecstatic employees 

Learn more

ACAS offers a free guide on how to handle requests, with lots of examples.

Filed Under: business, employment Tagged With: flexible working

And… breathe!

21 April 2014 By Gill

It’s been tough. But we made it through.

  • There was blood – paper cuts hurt!
  • There was sweat.
  • There were no tears, just copious amounts of swearing when the government gateway threw a wobbly from 11-13 April.
  • There was much chasing of errant contractors, some of whom couldn’t get their head around the 19 April HMRC deadline.

But we got there. All returns submitted, new files created, CIS refunds applied for.

Job done for another year 🙂

 

Filed Under: general musings Tagged With: CIS refund, year end

RTI penalties – trouble ahead

24 January 2014 By Gill

icebergHMRC are being lobbied to delay introducing the penalties for late RTI returns planned to start from April.

A survey by The Chartered Institute of Payroll Professionals shows that employers and payroll bureaux don’t believe HMRC are currently capable of getting it right.

The survey asked just two questions:

1. “do you have confidence in HMRC issuing accurate penalty notices in respect of the employer obligations for real time information from April 2014?”

 

72% said they didn’t have confidence in HMRC issuing accurate penalty notices

“They don’t seem to be able to issue employees with correct tax codes or apply the correct credits to employers accounts so why should we have confidence in them issuing correct penalty notices”

 

2. “do you think the penalty regime should be delayed?” And by how long

Nearly 80% said the penalty regime should be delayed by 12 months or more

“At least 12 month or until HMRC are able to correct their system to handle RTI submissions effectively without putting the responsibility back on the employer/accountant/bureau”

 

Shoddy administration by HMRC was the main reason given, with respondents telling tales of bureaucratic woe.

Most worryingly, many reported that HMRC’s figures often don’t add up: they fail to correctly reconcile the RTI report with the payments made. As a result the employer’s HMRC account shows an underpayment and so companies are being aggressively chased for non-existent debts.

We say:

A penalty regime is required to ensure compliance, but HMRC need to get its systems/processes in order first, however long that takes.

Never take a penalty notice at face value. Always check your own records, and if in doubt refer to your payroll professional / accountant.

UPDATE

On 10 February 2014, HMRC announced that the penalty regime will be delayed until October. Great news for employers and payroll professionals alike.

What reason has HMRC given? “To give employers more time to adapt to reporting in real time.” Hmm.
 
 
Image credit: McKay Savage (CC0 BY 2.0)

Filed Under: compliance Tagged With: HMRC, penalties, RTI

Taking a moment

27 December 2013 By Gill

I love this week. The stress and bustle of Christmas is over, and we get to catch our breath before New Year. Excellent!

ball of words

It’s the perfect time to step back and review the past year.

You’re focused on planning for the future, but are you learning from the past? Reflecting on the last 12 months will bolster your confidence and lay the groundwork for 2014. You could even use the answers to start examining your Strengths, Weaknesses, Opportunities and Threats (SWOT analysis).

The good

  • The high of taking on our 100th client.
  • Pleasure at seeing clients expand.
  • Passing the test of a wage inspection.
  • Redeveloping our website and starting this blog.

The bad

  • The low of saying goodbye to those that ceased trading.

The ugly

  • The challenge of HMRC’s real-time reporting for PAYE.
  • HMRC’s new interactive phone system. <I’m seeing a pattern here!>

What were your triumphs and disasters of 2013?

Image credit: Geralt (CC0)

Filed Under: business Tagged With: planning, SWOT

RTI penalties and how to avoid them

30 November 2013 By Jane

"Submit RTI" written on Post-It noteWhether you run your own payroll or outsource it to a specialist, as an employer the buck stops with you. So it’s important to know your responsibilities.

Whenever you pay your staff, you must tell HMRC about the payments. This reporting is known as real-time information – RTI for short.

If you pay your employees weekly, you must report weekly; if you pay them monthly, send the RTI monthly, and so on.

Double jeopardy

Your payroll must be:

  1. correct, and
  2. submitted on time. Send the RTI on or before the day that you pay your staff. Don’t forget or it’ll cost you.

Second time unlucky

HMRC will let you off once every 12 months – so no worries the first time your RTI is late, but if you make a habit of it the penalties will soon rack up.

How will I know?

HMRC will send out penalty notices only once a quarter, in July, October, January and April.

So if you get a penalty notice in July it will be for a late submission in April, May and/or June. Maybe all 3!

How much?

Unlike CIS penalties (a flat £100 per month), the RTI submission fines depend on your number of employees. For 2014/15 tax year they are:

No. of employees

Monthly RTI penalty

1 to 9

£100

10 to 49

£200

50-249

£300

250 or more

£400

The good news is that you can’t get more than 1 submission penalty per month. E.g. if you send a weekly RTI late for 4 weeks, you’ll only get fined once.

Those are the penalties for late submission – but remember that as well as being on time, the RTI must also be correct.

For errors, the taxman will base the penalty on the amount of potential lost revenue. If you took reasonable care, or were careless but reported the error without being prompted, you might not be penalised at all.

Avoiding RTI penalties

Whether you run your own payroll or outsource it to a specialist, as an employer the buck stops with you. So:

  • Be accurate

Take time to check your figures before paying the wages.

If your payroll service submits the RTI on your behalf, let them know any changes asap; e.g. if anyone leaves or joins, or if you’re giving someone a pay rise.

  • Be on time

If you pay your staff every Friday, that’s your RTI deadline. Diarise it, put a reminder in your phone, stick a Post-it on your fridge, whatever works for you.

If you use a payroll service, give them your info in plenty of time.

Submission penalties come into force from October 2014, so get into good habits now!

 

TOP TIP: Run your payroll a week in hand. This means that next Friday you’ll pay staff for the hours they worked this week.

This gives you more time to process the payroll and to send the RTI.

HMRC – late and inaccurate payroll reporting

Filed Under: compliance Tagged With: PAYE, penalties, RTI

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