As of 6 October, HMRC will distribute penalties automatically for a late RTI ‘full payment submission’ (FPS), or if you don’t submit it at all despite paying your employees.
How do I know if the FPS is ‘late’?
As set out by HMRC, the FPS is ‘late’ if you fail to submit it on or before the day you pay your employees – i.e. the ‘payment date’. There’s some confusion though with what the ‘payment date’ actually is – is it the day the employees receive their wages, or when the money leaves the employer’s bank?
For RTI purposes the ‘payment date’ is actually the contractually agreed date between the employer and the employee on which the employee will be paid. If the money is paid to the employee on an earlier or later date, maybe due to a bank holiday, it doesn’t change the ‘payment date’ by HMRC definition. This is all explained clearly in HMRC’s RTI guide on non-banking days.
Dependant on the payment date in your employee’s contract (either verbal or written), the agreed date is the one you should enter in the payroll software as the ‘regular payment date’. Providing you submit the FPS by the regular payment date, you should avoid the penalty for late filing.
You’re permitted to have just one late filing per tax year without a penalty, and HMRC will warn you if you do by a notice through their online PAYE service. You may have had some of these messages already, but no penalties have been issued. If you receive any more of these warnings then please let us know as the penalties can be as much as £400 per month.