Information for employers about late/non filing PAYE penalties, specified charges, inaccurate reports and how to avoid penalties in future.
HM Revenue and Customs (HMRC) has introduced penalties for employers who report their payroll information late from:
- 6 October 2014 for employers with 50 or more employees
- 6 March 2015 for employers with fewer than 50 employees
When penalties are charged
You can get a penalty if:
- your Full Payment Submission (FPS) was late
- you didn’t send the expected number of FPSs
- you didn’t send an Employer Payment Summary (EPS) when you didn’t pay any employees in a tax month
HMRC won’t charge a penalty if:
- your FPS is late but all reported payments on the FPS are within 3 days of your employees’ payday (this applies from 6 March 2015 to 5 April 2016)
- you’re a new employer and you sent your first FPS within 30 days of paying an employee
- it’s your first failure in the tax year to send a report on time (this doesn’t apply to employers who register with HMRC as an annual scheme or have fewer than 50 employees for the tax year 2014 to 2015)
Existing employers with fewer than 10 employees, who take advantage of the temporary reporting relaxation, must remember to use late reporting code ‘E’.
How much you pay
How much you’re charged depends on how many employees you have.
|Number of employees||Monthly penalty|
|1 to 9||£100|
|10 to 49||£200|
|50 to 249||£300|
|250 or more||£400|
If you’re over 3 months late you can be charged an additional penalty of 5% of the tax and National Insurance that you should have reported.
! If you run more than 1 PAYE scheme, you can be charged penalties for each.
Estimating what you owe
If you don’t submit your FPS on time or tell HMRC by sending an EPS that you haven’t paid any employees, they may raise a specified charge - an estimate of how much HMRC thinks you should pay. This is based on your previous PAYE payment and filing history. You will be able to see any specified charge by viewing your PAYE account online.
A specified charge doesn’t replace the need for you to send your FPS or EPS. Only the submission of the missing FPS or EPS for each month will replace the charge(s) with the amount that is due for each month.
If you send in updated year-to-date figures in your next FPS instead, the specified charges will remain in place, but your accounting record will be adjusted to reflect the year to date figures supplied in the later month.
If you get a penalty
HMRC sends penalty notices quarterly. A notice will include what you owe, how to pay and what to do if you don’t agree with HMRC’s decision to charge you.
Pay the penalty within 30 days of getting the notice - you’ll be charged interest if you don’t.
You will be able to appeal online against a filing penalty, using HMRC’s Online Service. In some cases, HMRC will accept and settle the appeal automatically.
You can appeal if you think:
- the penalty is not due
- the amount of the penalty is wrong
- you had a reasonable excuse for sending your reports late
These are some of the reasons you can give as grounds for appeal:
- data on the returns was incorrect
- filing expectation incorrect
- filed on time - do not use this reason for appeal if you are an employer with 50 or more employees, have been charged a penalty for tax month end 5 February and/or 5 March 2015 but reported your payroll to HMRC within 3 days of paying your employees - use reason code A
- fire/flood/natural disaster
- ill health
- IT difficulty
- missed correction/easement
- no longer have any employees
- no payments to employees
- reason code A - use this reason for appeal if you are an employer with 50 or more employees, have been charged a penalty for tax month ending 5 February and/or 5 March 2015 but reported your payroll to HMRC within 3 days of paying your employees
- other - only use this option if your reason for appeal doesn’t fall into any of the above categories in the online system
You can also send your appeal in writing to:
National Insurance Contributions and Employers Office
HM Revenue and Customs
The Notice of Penalty Assessment will contain a ‘Unique ID’ for each penalty shown on the notice. You must include the Unique ID to identify which penalty you wish to appeal against.
Where HMRC discovers careless or deliberate errors, the penalties that could apply will be based on the behaviour that led to the error and the amount of potential lost revenue for that return.
Errors that arise, despite taking reasonable care, attract no penalty at all and penalties for errors due to failure to take reasonable care can be reduced to zero with full and unprompted disclosure to HMRC.
See HMRC’s factsheet Penalties for inaccuracies in returns and documents for more information.