HMRC have told us for several years now that we must file our payroll returns on or before the date the employee is paid. Most employers have a regular payment date and as a payroll bureau we ensure that we file the return on or before that payment date.
But what happens if you forget to or are unable to file a return on the payment date?
This happens very occasionally to us when we do not receive payroll information in time to process and submit the information by the regular payment date. We know that when we do file the information our payroll software will ask us, on behalf of HMRC, for the reason why the submission is late. One of the set reasons has to be chosen and no explanation can be given.
A one-off late submission to HMRC is unlikely to incur a penalty but if you make frequent late submissions you may receive a penalty notice or you may be contacted by HMRC in the first instance before a penalty is applied. If you have not made a submission because you have no employees to pay but your payroll is still active you must always submit an EPS to tell HMRC that you have not paid anyone. This EPS will need to be submitted weekly if you ran a weekly payroll and monthly if you ran a monthly payroll. Failure to submit either the FPS or the EPS on more than one occasion during a 12 month period could result in a penalty.
Penalties are calculated quarterly and are based on the number of employees. The monthly penalty if you have between 1 and 9 employees is £100 and will be £200 for between 10 and 49 employees. So you could find yourself with a penalty of £300 without realising you should have been submitting a nil return because you didn't have any employees to pay.
If you receive a penalty notice advising how much you should pay you have the right to appeal against it if you believe the penalty is not due or you have a reasonable excuse for late submission. HMRC list various grounds for appeal which include death or bereavement, ill health, IT difficulty, theft or crime, fire, flood or natural disaster. Your appeal can be made online.
HMRC will take into account previous submission and payments history so if you are usually on time with both submissions and payments and have just been late due to any of the circumstances they set out they are more likely to accept your appeal than if you were frequently late with both or either.
Passing the responsibility of your payroll submissions to a third party such as ourselves will relieve you of the risk of penalties as well as ensuring your payroll is done accurately and on time.