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RTI and PAYE late payment penalties.

Draft Finance Bill 2013 clauses set out new RTI and PAYE late payment filing penalties that won’t come into effect until April 2014.

However, penalties for filing accuracy will come into force as soon as the Finance Bill receives Royal Assent.

Tonmoy Kumar, Manager of the Accounts Department of ABDS comments:
“The penalties for incorrect returns, which will come into force straight away, does not  give small businesses the time they need to adjust to the system. The emphasis is on accuracy rather than on time which actually defeats the purpose of RTI.”

The New law includes new late filing penalties for RTI returns, changes to current late payment penalties to ensure they can be charged in-year. The size of the late filing penalties will be based on the size of the PAYE scheme, rather than filing defaults and will include one unpenalised default, with the first filing default every 12 months not attracting a penalty.

For penalties relating to inaccuracies, the law has been amended to allow a tax year to be treated as a tax period under Schedule 24 to Finance Act 2007. In its commentary on the measure, HMRC argued the change would reduce the number of separate penalty assessments issued when errors are found.Other changes to the penalties and late filing regime include:

  • one penalty per month, even if the employer defaults more than once
  • charging penalties quarterly 
  • considering an easement for new employers who find filing their first returns difficult due to delays registering with HMRC 
  • legislating for an additional tax-geared penalty to apply for returns outstanding more than three months
  • considering and assessing tolerance where a small difference in amounts paid for a tax period compared to amount due to be paid as reported on RTI returns will not trigger a payment default
  • applying interest to late RTI penalties.

If you are unsure and need any help and advice on Corporation tax, VAT, PAYE, or you need to keep abreast of changes in legislation and how it could impinge upon your business, contact Lavinia Newman, Stuart Coleman or Tonmoy Kumar to discuss how ABDS can help

ABDS Chartered Certified Accountants of Southampton.
Tel: 023 8083 6900  E-mail:

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