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HMRC internal manual

Compliance Operational Guidance

Supporting Guidance: employer compliance: guidance by subject: Penalties: Apprenticeship Levy

You must follow the guidance below when considering penalties in relation to Apprenticeship Levy.

Late payment penalties

Late payment penalties do apply to Apprenticeship Levy. You should not charge these penalties during a compliance check because Debt Management charges all late payment penalties for PAYE, see CH157100.

Late filing penalties

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

Inaccuracy penalties (Schedule 24)

HMRC strategy is to support employers to correctly report and pay the Apprenticeship Levy.

If you identify an inaccuracy, or the employer advises that they

  • did not know about the levy,  or
  • assumed that the levy did not apply to them,

you should help the employer to correct their mistakes by

  • raising their awareness of the Apprenticeship Levy
  • providing specific advice on how to calculate the levy
  • advising them on what action to take to make sure they report and pay the right amount of levy, see COG915171.

You should only consider inaccuracy penalties in limited circumstances. This is where the employer’s behaviour falls short of what might be reasonably expected, for example, where there is deliberate or persistent non-compliance.

Example 1

Employer A has a pay bill of £4 million but is unaware of the Apprenticeship Levy’s introduction from April 2017. In September 2017 HMRC advised them, (for example, on a compliance visit or in writing), that they should be paying the Apprenticeship Levy.  In these circumstances you should not apply an inaccuracy penalty.

Example 2

Employer B has a pay bill of £4 million, but was unaware of the Apprenticeship Levy’s introduction from April 2017:

  • in September 2017 HMRC advised them, (for example on a compliance visit or  in writing), that they should be paying the Apprenticeship Levy
  • in October they subsequently make adjustments to their processes and made a levy payment, but they made an error when calculating the levy payment.

In these circumstances you should not apply an inaccuracy penalty.

Example 3

Employer C has a pay bill of £4 million but does not make any payments from April 2017:

  • in September 2017, HMRC advised them, (for example on a compliance visit or in writing), that they should be paying the Apprenticeship Levy
  • in October 2017, they continued to make no effort to pay the levy.

In this situation you should apply an inaccuracy penalty.

Example 4

Employer D is connected to two other employers – the total pay bill for the group is £5 million. Employer D does not realise they are connected for the purposes of the levy and does not share the allowance or pay their levy liability:

  • in September 2017 the group was advised by HMRC, (for example on a compliance visit or in writing), that they should be paying the Apprenticeship Levy
  • in October 2017 employer D makes a levy payment, but the other two companies did not
  • HMRC advises the three employers again and
  • in November 2017 all three companies pay the correct amount of Apprenticeship Levy.

No inaccuracy penalty should be applied.  However, you should consider inaccuracy penalties if the three companies continue to pay the incorrect amounts of Apprenticeship Levy, despite being advised by HMRC.

Example 5

A levy paying employer, employer E, is part of a pooled PAYE scheme with several other non-levy paying employers. As they are the only levy paying employer in the pooled scheme, they do not have to set up a separate PAYE scheme:

  • the levy paying employer makes a payment of levy in May 2017 but, they make a mistake and do not pay the correct amount
  • HMRC advise the employer of the mistake and how to correct it
  • in June 2017 the employer pays the correct amount of Apprenticeship Levy.

You should not apply an inaccuracy penalty in these circumstances.