Pay Academy

As agents and employers we are at that time of year once again when HMRC’s £400 penalty notices drop through the letterbox for failure to file year-end PAYE returns due 19th May.  And once again, we are all left somewhat bemused by HMRC’s inability to produce these on a timely basis. Why can’t HMRC issue these notices in June, when returns are just a month late and costing only  £100? . (The penalties grow at a rate of £100 a month). This would act as a timely reminder, with a mildly painful and annoying penalty for your oversight.  Instead, employers are left ignorant of their failing for nearly five months and then get a properly painful penalty hit.

This approach, which HMRC has been following for some years is now being criticised by the Courts in penalty apeal cases. One judge described it somewhat cynically as a “cash generating” exercise by HMRC.

HMRC have now chosen to defend their position claiming that the gap between the deadline closing and the issuing of notices is to allow people to file NIL returns . This explanation makes no sense at all as the deadline for filing a NIL return is no different to any other. The more realistic explanation is buried deeper in the statement;  “This also provides time for HMRC to make sure all returns…received by the annual deadline are processed.”

So what we are actually saying is that HMRC cannot issue penalty notices any earlier because they are still processing the returns. So, despite the fact that over £800 million of tax payers’ money has been spent on new HMRC systems, and the fact that employers have all had to make their own investments in order to be able to comply with the online filing requirements, HMRC are still taking longer than ever to process returns. Which leads me on to my other gripe – come real time information – what exactly will HMRC do with all this additional information and when on earth will they get round to doing it?

Post filed under News and tagged HMRC, PAYE, penalties, tax.