HMRC is warning that penalties will be dealt out to those who are not seen to be complying with the new RTI legislation, which means that employers and pension providers are required to send detailed information to HMRC on a regular basis.
Magic Accounts, one of the UK’s leading online accountancy firms, has just come through the last tax returns period where RTI non-compliance will not be penalised. From here on out, penalties will be handed out to businesses that are not sending the relevant information to HMRC whenever employees are paid, putting pressure on businesses all over the country to ensure they are working within the regulations laid down.
Laurence Collins, Managing Director of Magic Accounts, is issuing a rallying cry to businesses to ensure they remain compliant, saying that “It is worth reminding everyone that the penalties for late Full Penalty Submission can be catastrophic to a business; in a business of more than 250 employees, each late FPS will cost the employer £400 in penalties and fines.
“Businesses that are still adjusting to the changes and are setting up their systems to deal with the new legislation are putting themselves at risk of these fines if HMRC do not receive the information with these new rules.”
He adds: “Many of our clients are already compliant, having adapted to the new rules when they were first implemented last year, but there are still businesses that are yet to conform and they are at serious risk of being hit by huge penalties. It’s important for all businesses to ensure the information they send to HMRC is correct and arrives on time; if this is something they are struggling with, they should consider taking on some extra help in the form of a part-time accountant.”
RTI requires employers to submit information including details of earnings, tax and NI deductions and pension contributions whenever a payment is made to an employee – usually once every month.
Employers cannot report this information any later than the end of the tax month (the fifth day of the month), and all employment data that is sent to HMRC will be subject to a validation check against the existing HMRC database. It is hoped that this new system will reduce fraud and error across the country, which costs the UK £2bn per year.
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