South west-based chartered accountants Milsted Langdon are advising businesses that HM Revenue & Customs (HMRC) has announced that firms with 49 or fewer staff will be exempt from RTI late filing penalties until March 2015.
HMRC’s Real Time Information (RTI) initiative originally required all employers to provide information about tax and National Insurance deductions every time they paid an employee, rather than annually, by October this year.
However after many small businesses complained they were not ready to implement RTI, HMRC decided to postpone penalties until next year.
Simon Denton, Tax Partner at Milsted Langdon, said: “HMRC’s announcement means that until March 2015, small businesses will be allowed to submit PAYE information on a monthly basis.
“However while small firms have been given a period of grace, we would still recommend they get into the habit of submitting information to HMRC on or before payments so they do not fall foul of penalties from March 2015.
“Small business should ensure that they have the mechanisms in place to be RTI compliant now before it’s too late.
“It is also worth reminding employers with more than 50 employees that they will still be fined if they file PAYE returns late after the October 6 deadline.”
In announcing the deferral of penalties for small firms, Ruth Owen, HMRC’s director-general for personal tax, said: “We know from our experience of rolling out of RTI that to ensure a smooth transition for our customers it’s best to introduce changes in stages. This will allow us to update our systems and enhance our guidance and customer support as needed.
“We know that those who have had most difficulty adjusting to real-time reporting have been small businesses, so this staged approach mean they have a little more time to comply with the new arrangements before facing a penalty.”