HMRC require payroll returns to be filed with them either on or before the date when employees are paid. Most employers have a regular payment date when they pay their employees, and as an outsourced payroll supplier, we always make sure that we file the payroll return on or before the due date.
However, there may always be occasions when the employer cannot hit the due date. This article looks at why that might happen and what the consequences can be.
What Causes Late Filing?
The main reason this happens to us, and it is very rare, is that we do not receive the payroll information from the client in time to process and submit the information by the due date.
Importantly, when payroll information is filed, and we do it using our own bespoke software, the system asks for the reason for the late filing, on behalf of HMRC. There several options to choose from and it is not possible to fill in an explanation.
What About Penalties for Late Filing?
A one-off late payroll filing to HMRC is unlikely to incur a penalty – HMRC can be quite fair about rare lateness. However, if there are several and regular late submissions it will certainly attract their attention. This could result in an immediate penalty or HMRC getting in touch with you to find out what the problem is and warn you that a penalty will be applied next time.
Penalties are calculated on a quarterly basis and depend on the number of employees. The monthly penalties are as follows:
- 1 – 9 employees = £100
- 10 – 49 employees = £200
And don’t forget, even if you have no employees to pay in any given month, for whatever reason, you still must file a nil return.
If you have not made a payroll filing because there are no employees to pay, and your payroll is still active you need submit an employer payment summary (EPS) to tell HMRC that no one has received payment in the month.
An EPS needs to be submitted weekly or monthly depending on whether you run a weekly or monthly payroll. Failure to submit an EPS on more than one occasion during a 12-month period can and often does result in a penalty.
What About Appealing Against a Penalty?
If you receive a penalty for late payroll filing, you have the right to appeal against it if you believe the penalty is not correct or you have a reasonable excuse for the late filing., and your appeal can be made on line. Possible reasons for lateness include:
- death or bereavement,
- ill health,
- IT difficulty,
- theft or crime,
- fire, flood or natural disaster.
In deciding the outcome of the appeal, HMRC will consider previous submission and payments history. Typically, if your record has usually been good, you have more chance of successful appeal. It is the frequent late filers who tend not to win their appeals.
Avoid Late Payments and Penalties by Talking to Us
As outsourced payroll specialists, that is all we do and we make sure we get it right, on time, every time.