A contractor accounting firm has warned that businesses may unwittingly accrue cumulative HMRC fines as a result of the way in which late submission penalties for real time information (RTI) are being applied.
RTI came into effect in April this year and it was always part of HMRC’s strategy to begin issuing in-year fines for latecomers from 6th October. The scheme places an obligation on firms operating a PAYE system ‒ including Umbrella Companies, of course ‒ to report to the Revenue every time an employee or contractor is paid.
With employers now required to actively input regular full payment submissions (FPS) each time a payment is made to an employee, those failing to submit the data on time will be fined in proportion to the number of employees involved. These penalties will be issued on a quarterly basis, leaving open the possibility that some firms may accrue several penalties amounting to an exceedingly hefty sum and only realise that they have been fined when the Revenue bill lands on the doormat.
Accountancy firm Wilkins Kennedy LLP has urged firms to be more vigilant about RTI. Payroll supervisor Tony Reeves said: “HMRC is only going to notify employers quarterly at the end of July, October, January and April, so the possibility of fines is mounting for many businesses, who may not necessarily know until the bill comes through at the end of the quarter.”
Mr Reeves added: “More needs to be done to ensure that businesses are aware of penalties and fines that may be incurred. Businesses are also urged to do their homework and make sure they are up to date.”