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HM Revenue & Customs (HMRC) has published a consultation document which aims to make PAYE reporting in real time as easy as possible for employers, whilst deterring those who deliberately try to avoid complying.

The consultation document, “Securing Compliance with Real Time Information – Late Filing and Late Payment Penalties”, seeks views on how best to support employers to understand and comply with the requirement to send PAYE information in real time and on the appropriate design of late-filing and late payment penalties for RTI to deter the few who would deliberately not comply.

Stephen Banyard, Acting Director General for Personal Tax, said:

“We want the RTI returns not penalties. The aim is to encourage all employers to comply by making it as easy as possible for them to do so. We are working with employers and the payroll industry in our 12 month pilot to best achieve that. But penalties are necessary to deter the minority who don’t want to play by the rules. And to reassure those who do file and pay on time that non-compliance is being tackled.

“Getting the support and penalty system right for RTI is vitally important. We value the views of employers, payroll providers, pension scheme administrators, agents and anyone else with an interest in PAYE, and we want to hear from them.

“The good news is that the RTI programme is on track – the pilot is going extremely well and this consultation is another significant step on the road to full implementation at April 2013.”

RTI means employers and pension providers sending HMRC information about employees’ pay, tax and National Insurance deductions in real time, rather than just at the end of the tax year. Most employers and pension providers will be required to routinely report PAYE information in real time from April 2013, with all employers doing so before October 2013. RTI is currently being successfully piloted with around 300 employers.

In the consultation document published today, HMRC invites views on how to maximise compliance and on the design of a fair and effective penalty system that encourages employers to make RTI returns and payments to HMRC on time, whilst deterring those who would deliberately try to avoid complying. The penalty system will complement a wide range of HMRC support and advice, some of which is already in place, to help employers meet their obligations under the new reporting requirements.

Working with those involved in PAYE, such as the payroll industry, employers and agents, HMRC will design a new penalty system that is simple, proportionate, clearly set out in law and cost effective for both HMRC and employers to administer.

The consultation considers options for calculating RTI penalties for different sizes of employer and for various degrees of default, as well as how often penalties should be charged. It confirms that the new RTI penalties would be issued automatically and, as with other penalties, would be subject to appeal.

Decisions on exact timings for the introduction of the penalties will be made in light of the responses to the consultation.

Currently, employers are required to make annual returns of PAYE information to HMRC by 19 May for the previous tax year, and are liable to late-filing and late payment penalties if they fail to file and pay on time.

The consultation document, entitled ‘Securing Compliance with Real Time Information – Late Filing and Late Payment Penalties’, is available to download from the HMRC website at www.hmrc.gov.uk. The deadline for responses is 6th September 2012.

Visit http://www.hmrc.gov.uk/rti for more information on RTI.

Notes for editors

1. To respond to the consultation, email HMRC’s Tax Administration Policy Team at TAP@hmrc.gsi.gov.uk or write to them at: HM Revenue & Customs, RTI Penalty Consultation, Room 1/74, 100 Parliament Street, London SW1A 2BQ.

2. RTI Timeline:

Subject to the initial pilot being successful, up to around 1,300 volunteer employers will be reporting PAYE in real time by September 2012. By March 2013, subject to the success of the early pilot stage, around 250,000 employers will be reporting in real time. Most remaining employers will join RTI from April 2013, with all employers reporting PAYE in RTI by October 2013.

3. An online video to help employers reduce the problems caused by inaccurate employee data can be viewed on the YouTube website at http://bit.ly/xVazur.

4. Two free webinars are available: “Real Time Information – an overview” at https://www3.gotomeeting. com/register/274066646 and “Accurate Employee Information Matters – it can save time and money” at https://www3.gotomeeting.com/register/261725806

5. RTI will support the operation of Universal Credit – the Government’s flagship welfare programme – which brings together means-tested in and out-of-work benefits, tax credits and support for housing, and will improve work incentives and make work pay.
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