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HMRC internal manual

PAYE Manual

From
HM Revenue & Customs
Updated
, see all updates

Background: real time information (RTI): penalty and appeals service (PAS)

Penalty and Appeals Service (PAS)
Filing failures
Filing defaults
Penalties
Appeals
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Penalty and Appeals Service (PAS)

The Penalty and Appeals Service (PAS) is an automated system which manages the in-year filing failures, filing defaults, penalties and subsequent appeals.

PAS is also used to manage the appeals for late payment penalties and Construction Industry Scheme (CIS) penalties.

PAS issues filing penalty notices to employers who

  • fail to submit their RTI returns on time
  • fail to submit the expected number of returns

The first quarterly penalty notices were issued in January 2015.

The PAS system

  • creates and manages RTI filing failures and defaults
  • issues filing penalty notices to schemes with active defaults
  • allows employers and agents to appeal against filing and payment penalties using the HMRC Online Portal
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Employers and agents will access PAS through HMRC PAYE Online Services.

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Filing failures

There are two types of filing failures, late filing failures and non-filing failures.

Non-filing failure

A non-filing failure is created if an employer

  • fails to file the expected number of unique payment dates for a tax month (6th of the month to the 5th of the following month)
  • has not submitted an Employer Payment Summary (EPS) to tell HMRC that no employees were paid in a tax month
  • has not declared a period of inactivity covering that tax month

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Late filing failure

A late filing failure will be created when an employer

  • Fails to file their return on or before any payment date in the Full Payment Submission (FPS)

Late filing failures are created and sent to PAS on a daily basis. On the following day employers will be sent a late filing GNS message and HMRC users will be able to view the failures.

From 06 March 2015 until 05 April 2017 a late filing failure will not be created where the employer sends in the RTI return within 3 days of the payment date.

A late filing failure will not be created if the employer sends their return late with a ‘late reporting reason’ claimed against the payment providing the return is submitted within the extended time scale that the late reporting reason allows. See PAYE5055.

Multiple late filing failures can be created for a tax month but only 1 filing penalty will be charged.

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Filing defaults

A filing default is created when a scheme has one or more filing failures in a tax month. An employer can have up to a maximum of 12 defaults in a tax year.

Filing defaults are created and sent to PAS on a daily basis. The following day HMRC users will be able to view and amend the default status.

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(This content has been withheld because of exemptions in the Freedom of Information Act 2000) PAS will automatically de-activate a non-filing default where, a nil EPS or an FPS with a payment date relating to that month is received. (This content has been withheld because of exemptions in the Freedom of Information Act 2000)

Note: A late filing default can never be de-activated automatically by PAS on receipt of a return. However this does not prevent an HMRC user manually de-activating a default on receipt of an objection. (An employer can ring us on receipt of a GNS but if the penalty is issued the only way to resolve this is by making an appeal).

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Penalties

At the end of each quarter PAS will look for any active defaults that have not yet been penalised and decide whether it can charge a penalty. RTI511 Notice of penalty assessment letters are issued quarterly. PAYE filing penalties apply to all employers, however HMRC takes a risk based approach when selecting those employers.

 

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Filing penalties are created monthly but the notice will be issued quarterly. A penalty notice can contain a penalty for more than one tax month. The penalty charge is the sum of the value of penalties included in the penalty notice.

Every default has a unique identifier (unique ID) that must be used externally (by employers and agents) as part of the online appeals process and internally (by HMRC) to manage defaults penalties and appeals. Each penalty is identified by the unique ID attached to the default that gave rise to the penalty. (This content has been withheld because of exemptions in the Freedom of Information Act 2000) The unique ID will be shown on the RTI511.

The value of the penalty is based on the number of live employees for that scheme when the default is created.

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

 

If a scheme has no live employments attached to it when the default is created, a penalty charge will not be issued.

 

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When a penalty notice has been issued, it cannot be cancelled without an appeal.

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Appeals

If an employer or his agent wants to appeal a filing penalty they can do so using PAYE online, or in writing to HMRC. HMRC’s preferred method is for customers to appeal online using PAS and as such HMRC will encourage customers to use this method.

To appeal against a penalty online, the employer or agent will access PAS via PAYE online and then select the unique ID relating to the penalty. As soon as they submit an appeal, the employer or agent receives an on screen acknowledgement stating their appeal has been submitted successfully and advise them to check their GNS messages to view the status of the appeal.

Some of the reasons an employer can give as grounds for appeal can be found on the GOV.UK page ‘What happens if you don’t report payroll information on time’.

The acknowledgement will provide the employer or agent with a reference number. This will only be used if they need to contact the on line services helpdesk to confirm receipt of the appeal.

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PAS will never automatically reject an appeal.

Once a penalty has been appealed, the employer or agent will no longer be able to view the penalty via the online portal. This prevents multiple appeals against the same penalty.

PAS does not have a print facility, it is suggested that employers/agents may wish to take a screen print of the appeal confirmation screen prior to submitting the appeal.

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Appeals GNS messages will not be issued if the employer or agent submits a paper appeal.

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