RTI spaghetti, Holiday pay, Auto-enrolment

The frantic personal tax season is almost over so this week we are looking at issues relating to payroll and pensions. RTI late filing penalties are starting to arrive with large employers for the quarter beginning 6 October 2014. Claims for unpaid holiday pay are also a worry for some employers. Auto-enrolment a nightmare you have tried not to think about, but those staging dates are just around the corner, so action is needed now.

RTI spaghetti

The good

RTI was supposed to make the PAYE reporting ìinstantî i.e. in ìreal timeî. So why do we still have to answer those end-of-year questions on the final FPS or EPS submitted for the year? Surely HMRC have all the information they need as it has been reported during the tax year.

Thatís true and HMRC have admitted they donít use the data provided by the end-of-year questions for compliance purposes, so those questions have been scrapped (by SI 2015/02). Thus when you submit a final FPS or EPS after 6 March 2015 in theory you shouldnít have to answer those annoying questions.

However, this change was announced too late to be included in most payroll software for 2014/15. Even HMRCís free Basic PAYE Tools software will not be updated for this change to the end of year procedures until July 2015. So it looks like you will have to answer those pointless questions for 2014/15 although HMRC will do nothing with the information.

The bad 

RTI requires every employer to report to HMRC at least once per tax month by the ìpayment dateî for the employeesí salary, unless the PAYE scheme has been registered as ìannualî. This creates 12 filing deadlines for the tax year instead of one end-of-year deadline.

If a filing deadline is missed there is a potential late filing penalty. From 6 October 2014, large employers (50 or more employees) have been charged penalties for late filed RTI reporting deadline, although those employers are permitted one late filing per tax year. The penalty notices for October to January will start to arrive with employers this month. But HMRC are not sending copies tax agents, so you should remind your clients to tell you if they receive a penalty notice.

Smaller employers (up to 50 employees) will be charged penalties for missing RTI filing deadlines from 6 March 2015. Those smaller employers are not granted one late filing in 2014/15, so if the RTI report due in the period 6 March 205 to 5 April 2015 is late, it will generate a late filing penalty. 

The ugly 

There is a new online system to appeal against RTI penalties. The penalty notice includes an ID number to use to log the appeal. You should be able to do this for your clients using PAYE online. However, remember to take a screen print of the information you have keyed-in with the appeal ñ ie the reasons for appeal, as there is no prompt to print a copy for your records.

This is an extract from our tax tips newsletter dated 22 January 2015. The newsletter itself contained links to related source material for this story and the other two topical, timely and commercial tax tips. It's clearly written and extremely good value for accountants in general practice. Try it for free by registering here>>>