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HMRC internal manual

Compliance Handbook

From
HM Revenue & Customs
Updated
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Charging penalties: introduction: penalties for failure to file PAYE Real Time Information returns on time - FA09/Sch55 - manual process: fixed late filing penalty - manual process for charging penalties

Real Time Information (RTI) employers must submit information about payments made to employees on or before the date on which payment is made. For most employers this will mean making multiple returns to HMRC on a weekly or monthly basis instead of one annual return (forms P35 and P14) at the year end.

Fixed late filing penalty
Un-penalised first default
New employers
Raising manual late filing penalty

Fixed late filing penalty

An employer is liable to a penalty if, during a tax month, they fail to file one or more RTI returns by the filing date unless they

  • have a reasonable excuse for not doing so and
  • file the return without unreasonable delay after the excuse ended.

The filing date for an RTI return is the date the payment was made. Paragraph 6C(6) provides that an employer will only be liable to one penalty for each tax month for each PAYE scheme. These penalties are normally issued automatically on a quarterly basis.

Note: For non-registered cases, for example in a Hidden Economy case, retrospective late filing penalties will not be issued automatically.

The amount of penalty depends on the number of employees:

Number of employees Amount of penalty
From 1 to 9 £100
From 10 to 49 £200
From 50 to 249 £300
250 or more £400

Un-penalised first default

For each tax year an employer will not be charged a penalty for the first tax month during which they fail to file one or more returns on time. However, this exemption does not apply to employers who operate an annual PAYE scheme who are only required to file one return per year, see CH62840.

New employers

New employers will not be charged a penalty for failing to file a return on or before the filing date during the initial period. The initial period is 30 days beginning with the date they were required to make their first RTI return in the initial period, see CH62860.

Raising manual late filing penalty

Where automated late filing penalties have not been issued, for example in a Hidden Economy case, you should

  • calculate the penalties due
  • consider if there is a reasonable excuse for the failure
  • consider if there are any special circumstances that could allow HMRC to apply special reduction
  • complete an AO Report Form - Authorisation Stencil (available via SEES Forms and Letters) providing evidence as to why you consider a penalty is appropriate
  • complete a Penalty Explanation Letter, the Penalty Notice and Penalty Schedule for Sch55 RTI penalties (available via SEES Forms and Letters)
  • refer the case to the Authorising Officer.

The Authorising Officer will

  • consider the information provided
  • authorise the penalty (if appropriate)
  • refer the papers back to you.

Once the Authorising Officer approves the late filing penalties, you must

  • give the employer the Penalty Explanation Letter and
  • raise the penalties.

This will either be by formal assessment or can be included in a contract settlement if it is more cost effective and administratively convenient to do so.

When proceeding to raise a formal penalty assessment:

  • prepare the Late Filing Penalty Notice and Schedule (available via SEES Forms and Letters)
  • complete a Manual Penalty Stencil
  • email the stencil, penalty notice and schedule to the SAFE officer who will create the charge on SAFE using the charge type Non ECS PAYE EOY Penalty and return the stencil to you advising the SAFE reference
  • use the SAFE reference to create a payslip
  • issue the payslip, notice of penalty assessment and penalty schedule
  • BF the case for 30 days.