Online filing date looms for employers

15 February 2010

HM Revenue and Customs (HMRC) is sending out letters to employers over the next few weeks alerting them to significant changes to the way that employer annual returns are to be filed.

By the 19 May, all small employers with fewer than 50 but more than five staff must submit their annual returns online. Paper filing will not be an option.

Employers with between one and five employees will be given a further year in which to prepare themselves for online filing. Employers with more than 50 workers have been obliged to send in their annual returns online since 2006.

In its statement, HMRC said that any affected employer who submits a paper return, even if it's before 19 May, could be liable to a penalty charge.

In order to file online, employers must register with HMRC's PAYE online service, details of which can be found at www.hmrc.gov.uk/paye and by clicking 'Register for PAYE Online'.

Smaller employers can use HMRC's own free software to file their employee data electronically; larger employers can purchase a range of commercial software.

The tax authority said that online filing reduces delays and mean that employee records are updated more quickly.

New late penalties

Another change, this time concerning penalty charges, also comes into effect as from May 2010.

HMRC will be introducing new penalties for late payment of PAYE, including income tax, national insurance contributions, student loan deductions and construction industry scheme deductions.

Fines will henceforth be worked out as a percentage of the amount paid late instead of being issued as a fixed sum, ranging from 1 per cent to 5 per cent of the amount outstanding. For in-year payments, the percentage charged will rise as the number of late payments in the year also rises.

Employers who think they may have difficulty paying should call HMRC's Business Payment Support Service, before the payment is due, on 0845 302 1435. If they do, and HMRC agrees time to pay, they will not face charge late payment penalties so long as the business keeps to the agreement.

Stephen Banyard of HMRC said: “Major changes to PAYE filing and payment are only a matter of weeks away, so employers need to make sure they’re well prepared for them. We will be writing to affected employers over the coming weeks, so please look out for this information, and take the time to read it.”

Mr Banyard added that employers do not need to keep a hard copy of their Employer Annual Returns if they file them online themselves.

One consequence of this will see HMRC reducing its stocks of hard-copy PAYE forms, both P35s and P14s. Employers are, therefore, being advised to review their PAYE stationery requirements before ordering paper forms from HMRC.

New HMRC bank accounts

HM Revenue and Customs (HMRC) has also reminded taxpayers of the need to use the tax authority’s new bank accounts.

Last year, HMRC switched its banking services from the Bank of England to Citi and Royal Bank of Scotland Group.

As a result, all HMRC bank sort codes and account numbers changed during 2009.

HMRC has continued to accept payments made using the old Bank of England account details on temporary basis. However, this will change in 2010 as the old accounts are closed.

Taxpayers are being told that if they have not already set up their payments to go to the new accounts, they should do so as soon as possible.

Anyone paying by Bank Giro should make sure they use one of the newly issued payslips that contain HMRC’s new NatWest account details. Anyone setting up a new Bank Giro account shouldn’t use any payslips containing the old Bank of England details.

HMRC said that it has updated most of the payslips that are issued to customers, but any business that still holds the old payslips should contact the office that issued them and ask for replacements.

For payments by BACS direct credit, internet or telephone banking, or CHAPS, taxpayers can check the new HMRC bank account details by visiting http://www.hmrc.gov.uk/payinghmrc/index.htm for a guide to the type of tax or other payment they are making.

However, anyone paying by direct debit doesn’t need to take any action as all the instructions are to remain in place.

From 2010, payments made using the old bank account numbers could be returned, HMRC warned, adding that this may lead to late payments, and penalties and interest charges.

Details of tax offices can be found at http://search2.hmrc.gov.uk/kbroker/hmrc/locator/locator.jsp