HMRC issued a statement at the time detailing the measures they would be taking to help employers to avoid incurring unnecessary penalties and significantly reduce the number of cases where penalties in excess of £100 are charged. Now, starting in 2012: HMRC send the notice requiring the submission of a return and warning of the consequences of failure in mid-March, so that it is received closer to the deadline; they send a reminder, in early May, to those 20 employers whose returns are still outstanding (thus giving them the opportunity if they act quickly of avoiding a penalty); and in early June they send what is referred to as a “P35 Interim Penalty Letter”, advising employers that they may have incurred one month’s penalty, reminding them of what is required, and pointing out that if the requirements do affect them they should take immediate action to avoid incurring further penalties.
The date on which the first penalty notice is sent has not changed and remains in September.
Of course with the introduction of Real Time Information in 2013, the end of year process will cease to exist and the build-up of these late penalties will no longer be an issue for employers.
EMPLOYMENT TRIBUNAL: ALLOCATION OF PAYE PAYMENTS
1 November 2012
In a recent tribunal case it was ruled that HMRC do not have a duty to re-allocate PAYE payments to different accounting periods to reduce penalties payable by taxpayers
Pinsent Masons tax team reported on this case.
The taxpayer ran a pharmacy and its main source of income was the Department of Health. The company consistently made late monthly payments of PAYE and was imposed a penalty by HMRC. HMRC had contacted the company on many occasions during the relevant year. On one of those occasions, its director had specifically requested not to be called back that evening as he was watching football. The company argued that: HMRC should have re-allocated each payment to the current tax month (and not to the previous tax month) so that no penalty for late payment would have been due; it had a reasonable excuse as the Department of Health had been consistently late in making payments. The tribunal found against the taxpayer on both issues. The tribunal also found that the company had itself allocated the payments to the previous months (as they were calculated on that basis) and that HMRC had no power to re-allocate the payments to the current month. On the reasonable excuse point, the tribunal noted that “Insufficiency of funds is not a reasonable excuse unless it was attributable to “events outside the company’s control”. The Tribunal accepted that late payments by the Department of Health could have constituted a reasonable excuse - as the Department was the taxpayer’s only source of income - but concluded that the evidence submitted by the taxpayer was too weak. CIPP Comment The employer can determine the allocation of each PAYE payment to a specific tax month and ensure HMRC are informed which year and month each payment relates to, as per HMRC Guidance . Failure to follow this process will result in the payment being automatically allocated to the previous tax month.
CIPP Policy News Journal
12/04/2013, Page 66 of 362
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