HMRC have started a new campaign targeting employees with second incomes and who have not paid tax on this second income source.
This drive is the latest in a series of targeted tax clampdowns on certain professions or areas, like consultancy work, with warnings that HMRC will be using all resources available to trace offenders.
Examples given within the Campaign Scope are as follows:
- Receiving payment for organising parties/events or providing entertainment.
- Making and/or selling Craft Items
- Taxi Driving; Hairdressing; Fitness Training; Landscape Gardening; Regular Car Boot Sales, Market Stalls, etc.
- Consultancy Fees or Public Speaking or Training Fees
As in previous campaigns, HMRC have adopted a “carrot and stick” approach where they offer more lenient terms if any tax due is paid voluntarily. HMRC stated they will take account of the level of help provided and the accuracy of details given when offering reduced penalties but also warn those choosing not to declare their second income - “Where additional taxes are due HMRC will usually charge higher penalties…up to 100% of the unpaid liabilities or up to 200% for offshore related income.”
They will now start from 6 October 2014. To avoid late filing penalties, you must make sure all submissions due are fully up to date by 5 October 2014.
In addition to where submissions do not appear to have been filed by the due date, a late filing penalty for a month may be issued where one of the following applies:
• payment information is not received as expected on an FPS
• you haven't told HMRC that no employees have been paid by sending an EPS
However, no penalty will arise for the first month in each tax year where there is a filing default. This means there are a maximum number of 11 fixed penalties per tax year that can be charged for filing failures.
New employers will not be issued with a penalty if their first FPS is received within 30 days of making their first payment to an employee. But after that, normal penalties rules will apply if an FPS is filed late.
The size of the late filing penalties depends on the number of employees within the PAYE scheme.
|Number of employees||Amount of the monthly filing penalty per PAYE scheme|
|1 to 9||£100|
|10 to 49||£200|
|50 to 249||£300|
|250 or more||£400|
HMRC will use the latest information available to determine the number of employees, and the size of the filing penalty for each period where a return is late. <
When the penalty notice will be issued
Ordinarily, HMRC will send employers a filing penalty notice quarterly in July, October, January and April, where appropriate. These penalty notices show the amount of the filing penalty for each tax month identified in that quarter. For example, a penalty notice in July will show any filing penalties arising in the first quarter of the tax year - that is, month 1 (6 Apr to 5 May), month 2 (6 May to 5 June) and month 3 (6 June to 5 July).
The penalty notice will advise you of the amount you're being penalised, tell you how you can pay it and what to do if you don't agree a penalty is due.
Additional penalties for returns over three months late
Where a return is late for three months or more and the information that it would have contained has not been provided on a later return, a further penalty may be charged. This additional penalty is set at 5% of the tax/NICs that should have been shown on the late return. This will be used for the most serious and persistent failures.
The HMRC deadline for 2013/14 FPS submissions has now lapsed (19th April). Therefore, if you attempt to submit an FPS for a 2013/14 pay period HMRC will reject it.
Any 2013/14 payroll submissions, including additional payments, corrections or omissions, must now be submitted to HMRC using the Earlier Year Update (EYU) submission.
HMRC published a new 2013/14 End of Year guide today, http://www.hmrc.gov.uk/payerti/end-of-year/finish-payroll.pdf
A BrightPay 2013/14 end of year checklist is also available, simply click here https://www.brightpay.co.uk/5_Steps_to_EOY.pdf.
HMRC have this week published information to help employers understand how to go about informing HMRC of errors on RTI returns for the tax year 2013/14. This includes a new flowchart (correcting 2013-14 PAYE submissions after 5 April 2014 (PDF 35K) ) which provides employers with a step-by-step guide to follow should any of the following scenarios arise after the 5th April 2014:
The employer wishes to correct amounts already sent on a Full Payment Submission:
· up to and including 19 April 2014 employers can make corrections by sending an Additional FPS for 2013-14. Employers can send more than one FPS to make corrections up to that date if needed. Employers are not required to send another Employer Payment Summary unless corrections are also needed to this.
· after 19 April 2014, employers must make any corrections to a 2013-14 FPS on an Earlier Year Update (EYU). Employers can send an EYU even if they haven't made a final FPS submission. If further changes are needed, employers can correct an EYU by sending HMRC another EYU with the corrected information.
The employer wishes to correct figures already submitted on an Employer Payment Summary (e.g. for the recovery of statutory payments):
· Employers can make corrections to an Employer EPS by sending another EPS to report the correct total year-to-date figures for all recovered payments within that tax year. Employers have up to six years from when they sent in their original EPS to do this.
Full guidance on the above can be found on HMRC’s website at correcting payroll errors - current year
The new tax year sees a number of changes in the area of employment law. These include:
From 6th April claimants should send their dispute details to ACAS first before going to a tribunal. From 6th May this step will be compulsory. ACAS will endeavour to conciliate a settlement, although both parties may opt not to participate in the process, in which case an Early Conciliation Certificate will be issued and the claim can proceed to tribunal.
Employing Illegal Immigrants
The maximum fine which can be issued to employers found employing individuals who do not have the right to work in the UK has been increased from €10,000 to €12,000.
Financial Penalties on Employers
Tribunals will now have new rights to issue penalties to employers in breach of employment rights maliciously or recklessly. Penalties will be in addition to any compensation due to the employee, they will be payable directly to the Secretary of State and may vary between £100 and £5000.
Removal of Statutory Discrimination Questionnaire
The questionnaire by which an individual can obtain information about potential discrimination from an alleged discriminator is removed.
Statutory Rates and Compensation Increase
From 6th April statutory sick pay (SSP) increased from £86.70 to £87.55. The Percentage Threshold Scheme which allows employers with relatively high levels of sickness absence to recover a percentage of statutory sick pay is also ending.
Statutory maternity pay (SMP), statutory paternity pay (SPP), and statutory adoption pay (SAP) have all increased from £136.78 to £138.18 since 6th April.
For the purpose of calculating statutory redundancy and basic award for compensation, a “weeks” pay has been increase from £450 to £464. The maximum compensatory award from unfair dismissal rose from £74,200 to £76,574.
Who can claim
The Employment Allowance is available from 6 April 2014. If you are eligible you can reduce your employer Class 1 NICs by up to £2,000 each tax year.
You can claim the Employment Allowance if you are a business or charity (including Community Amateur Sports Clubs) that pays employer Class 1 NICs on your employees' or directors' earnings.
If your company belongs to a group of companies or your charity is part of a charities structure, only one company or charity can claim the allowance. It is up to you to decide which company or charity will claim the allowance.
You can only claim the £2,000 Employment Allowance against one PAYE scheme - even if your business runs multiple schemes (also see the further guidance on claiming the Employment Allowance).
Not all businesses can claim the Employment Allowance, see excluded employers for more information.
You cannot claim the Employment Allowance, for example if you:
- employ someone for personal, household or domestic work, such as a nanny, au pair, chauffeur, gardener, care support worker
- already claim the allowance through a connected company or charity
- are a public authority, this includes; local, district, town and parish councils
- carry out functions either wholly or mainly of a public nature (unless you have charitable status), for example:
You do not carry out a function of a public nature, if you are:
providing security and cleaning services for a public building, such as government or local council offices
supplying IT services for a government department or local council.
Personal and Managed Service Companies who pay contract fees instead of a wage or salary, may not be able to claim the Employment Allowance, as you cannot claim the allowance for any deemed payments of employment income.
Service companies can only claim the allowance, if you pay earnings and have an employer Class 1 NICs liability on these earnings.
HMRC has recently issued letters entitled 'Paying PAYE electronically' to employers who are due to make their one off annual 2013 to 14 PAYE payment for month 12, 6 March to 5 April by 19/22 April 2014.
HMRC has published the following message on their ‘What’s New’ pages:
Employers who pay PAYE only once a year and are due to pay month 12 of 2013 to 14
"Most employers now report their PAYE information in real time, known as Real Time Information (RTI). This means each time you pay an employee you must submit details about employees’ pay and deductions to HMRC using payroll software. As part of this change and our ongoing drive to encourage employers to pay using electronic methods of payment, we have stopped automatically issuing letters with a payslip to all employers who pay their PAYE on an annual basis in one single month of the year.
If you have received one of the ‘Paying PAYE electronically’ letters we will not be sending you a payslip to pay your month 12 payment and we are encouraging you to follow the guidance on the letter and pay us electronically.
As the letter advises, paying electronically is more secure, faster, easier and allows you to pay by the 22 April instead of the 19 April if you paid by cheque in the post.
If, exceptionally, you are unable to pay using an electronic method then you will find a pro-forma payslip and guidance on how to use it elsewhere on this website.
Your payment is due on the 19 April if paying by cheque in the post or 22 April when paying electronically. We may charge interest and late payment penalties if you do not make your payment on time."