HMRC relaxes PAYE late filing penalties

HMRC will begin relaxing automatic late filing penalties for people who send PAYE information late, officials have indicated.

The revenue said it would take a 'proportionate approach' instead of issuing automatic penalties in the event that an employer reports PAYE information late.

Investigations will now be concentrated on 'the more serious defaults on a risk-assessed basis'. The move will allow HMRC to focus on serious cases of non-compliance, and to invest resources in educating employers on compliance issues.

The decision reflects the conclusions of a policy document published by HMRC in February 2015. The report argues that small automated penalties are costly and resource intensive for the revenue to pursue, and detract from its ability to pursue serious compliance failures.

The news comes after a leaked HMRC memo revealed that the revenue would no longer be investigating each individual late filing of self-assessment returns. Officials will now waive the £100 late filing penalty if people provided a 'reasonable excuse' on appeal.

Nigel Holland from Holland & Co Chartered Accountants said:

“Whenever there are changes to the law for submissions to HMRC, many firms experience difficulties because they often do not have the infrastructure in place to handle these changes. These problems are greater for smaller firms who very often do not employ someone who can specialise in this area.  The real time PAYE rule changes have been difficult for some businesses.

Penalties for non compliance are a complicated area and I am pleased to hear that HMRC are concentrating on firms who commit the most serious defaults rather than other businesses who fall foul of the rules because of ignorance.

In an ideal world firms will be complicit with the rules regarding PAYE submissions however this is often not the case. At my firm we have an excellent record of appealing against HMRC penalties for firms who have been unable to comply with the raft of rules which now exist.”