HMRC AnnouncementTuesday, March 27th, 2012
2011 saw an unfortunate year for HMRC in the First Tier Tax Tribunal, with a number of judges overturning Penalty Notices that had been served for the late filing of the P35. Judgments referred to HMRC acting in a ‘high handed’ and ‘disreputable’ manner by sending out Penalty Notices in September for the late filing of the P35 in May. These Notices showed a penalty in the sum of £400, being an accumulated £100 per month fine for the late filing which occurred four months previously. Judges, commentators and taxpayers were united in their complaints, asking why HMRC could not advise of the non-compliance earlier, thereby giving the employer the opportunity to rectify the situation sooner and prevent further penalties accruing.
Last week, HMRC responded to the criticisms in a joint statement with professional bodies and charities. The ‘measures’ outlined to deal with the situation are as follows. Note, however, that the first actual Penalty Notice date has not changed and will still be sent in September:
- The initial notification to complete the P35 will be sent from mid-March rather than mid-February. This will ensure that it is received nearer to the time that the P35 is actually due for completion, leaving less time for it to remain in the ‘Pending’ tray (!)
- From 28 April 2012, where HMRC believes that the P35 is still outstanding, an ‘Employer Annual Return Reminder’ will be issued. This will prompt the employer to complete the P35 if it has not been done, thereby limiting the £100 per month penalties
- From 31 May 2012, a ‘P35 Interim Penalty Letter’ will be issued advising the employer that a penalty has been incurred and advising on what to do to reduce further penalties accruing
- Improvements to the online P35 specifically relating to the message that employers receive when sending the P35 in test mode. On-screen messages will clarify that the submission has been made in test mode and that a live submission still needs to be made. HMRC is encouraging employers using commercial payroll software to sign up for their E-Mail alert facility to benefit from this new feature
- Employer Helpline staff will be instructed to advise employers about filing dates to help them avoid a penalty occurring or increasing
- From 2013, improve the text information on the P35 and the reminder letters to include the warning that the first Penalty Notice that is issued will still actually cover four months
There are many employers who believe that they have complied with their obligations and have filed on time, only to be advised three of four months later that there is a backdated penalty that needs to be paid (or appealed against). Therefore, any measure designed to minimise or prevent the employer incurring these penalties is welcomed and supported by The Learn Centre.
- HMRC Website – Employers will be told sooner about late PAYE Returns