Penalties For Not Reporting Payroll Information On Time & Tips To Avoid Them

Failure to report payroll information on time will, in most cases, leave companies with a hefty fine. Those who have regular problems may be best served using business payroll services.

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Employers who are late in reporting could receive a monthly penalty charge of up to £400. But for SMEs, there is slightly less cause for concern: the minimum amount for companies with fewer than 10 employees stands at £100.


However, if you are late by more than three months, you may be charged an extra 5% on top of the tax and National Insurance that was expected to have been reported. Even for the minimum monthly charge of £100, this can end up being much more costly than corporate payroll solutions.


How Do You Get A Charge?

You can receive a penalty in instances where:

  1. Your Full Payment Submission (FPS) is late
  2. You do not send the expected number of FPSs
  3. You do not send an Employment Payment Summary (EPS) in a tax month where you did not pay any employees

HMRC will not charge a penalty:

  1. If all reported payments on the late FPS are within three days of payday
  2. You are a new employer and made sure to send your first FPS within 30 days of paying an employee
  3. It is the first time in the tax year where you failed to send in a report on time (not applicable to employers registered on HMRC’s annual scheme)
  4. You use business payroll services consistently to report accurately and on time


When Do You Receive Your Penalty Notice?

HMRC send these out in January, April, July and October to tell you what amount is owed for the penalty and how you can pay. If you think you have been issued a penalty in error, the amount charged is incorrect or you have a ‘reasonable’ excuse for reporting late, then you are able to send an appeal in response.


Examples of grounds for appeal include:

  1. A death or bereavement
  2. A flood, fire or natural disaster
  3. Ill health
  4. Technical issues with I.T.
  5. Theft or crime
  6. Missed correction/easement during implementation of corporate payroll solutions

You can either appeal online using HMRC’s online service where – sometimes - an appeal will be accepted and settled automatically. Alternatively, you can complete an appeal in writing and send it to HMRC directly. Another option is to use business payroll services to remove all concerns over misreporting or being late.

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