PAYE penalties and online appeals

PAYE penalties and online appeal by John Hill

As reported previously in Employer Focus, PAYE penalties for late submissions and late payments under RTI are now in force for employers with 50 or more employees and are due to come into force for smaller employers from 6 March 2015.

HMRC have launched an online procedure for appealing these penalties where they have either been incorrectly issued or there is a reasonable excuse to explain the default leading to the penalty.

Agents can use the online system to appeal penalties on behalf of clients, although the penalty notice itself will only be issued to the client and there are no plans to send a copy to agents.

Back in October 2014, representatives from HMRC gave a brief demonstration of the online appeals system to the RTI Taskforce where we were shown the various screens that an agent will need to go through in order to complete an appeal.

The first screen, after logging in, will show an agent the list of penalties that can be appealed on behalf of a client. It appears that only one penalty at a time can be selected and appealed. The agent will then be asked to select the reason for the appeal from a drop-down menu which will include Category A – factual reasons or Category B – reasonable excuses.

Category A reasons cover situations such as where the liability was paid on time, the return was filed on time, the employer is not trading or there are no employees. There will also be the ability to select ‘other’ as a reason and space to type in a narrative of up to 1,000 characters. Category B reasonable excuses include fire/flood/natural disaster, death, ill health, theft/crime, IT difficulties or other, again with space to type a narrative of up to 1,000 characters.

Agents are reminded at this point that appeals can only be made against late filing penalties or late payment penalties once the return has actually been filed or the liability actually paid.

The next screen is called a ‘confirmation’ screen where the agent is asked to check that the details of the client’s appeal are correct and, if not, there is the ability to go back and amend the details. A unique ID reference is created at this point which will need to be quoted in future correspondence to identify the appeal. Agents are advised to take a ‘screen shot’ of this confirmation screen to keep on file as there is no print function at present.

Moving onto the next screen, the agent is asked, as a security check, to enter their online service user ID and password before pressing the submit button. An ‘acknowledgment’ screen then appears to show that the appeal has been submitted successfully and that HMRC will now consider the appeal. An acknowledgement reference is generated and the agent is advised to make a note of this. Although, HMRC advised the RTI Taskforce that if an agent calls up to discuss the appeal, call centre staff won’t be able to recognise the acknowledgement reference, only the unique ID reference generated at the confirmation stage, hence the advice to take a screen shot at that point. However, it is also advisable to take a screen-shot of the acknowledgement screen as this proves that the agent did progress the appeal through to the submission stage.

This is particularly important evidence to keep when considering that the penalty, once appealed, will then be removed from the list of penalties in respect on this client. There is currently no ability to view a screen which shows all appealed penalties that are awaiting a decision. The RTI taskforce did suggest that such a function would be very useful, and maybe it will be something we see as a future development. Until then agents should ensure that they keep their own records of the appeals made.

A submitted appeal will be considered by the ‘system’ and if it meets a set criteria then the penalty will automatically be cancelled. A GNS message will be issued and a letter sent to the client, both confirming the cancellation.

If the appeal is not accepted by the ‘system’ a GNS message will be issued to say that the appeal has been sent for further review. From that point on, any correspondence will be directly with the client in writing, not via GNS messages.

At present, there has probably been very little activity on the online penalty appeals system, but this could be set to increase shortly.

On 17 February 2015, HMRC announced a relaxation to the penalties in that it will not impose a penalty for late filing if the delay is for three days or less. This relaxation will only apply from 6 March 2015; the date the penalty regime is extended to employers with less than 50 employees.

For larger employers, HMRC have advised that if a penalty has been received for late filing in the period since 6 October 2014 where the default was for three or fewer days the employer or their agent can appeal this penalty by selecting ‘other’ (presumably under either category A or B) and noting in the free text box ‘return filed within three days’.

The online appeals system is just one part of HMRC’s general move to engaging digitally with agents and taxpayers.

The Agent Online Self-Serve (AOSS) project is due to enter a private beta stage in April, with access to PAYE liabilities and repayments being the first stage of the process. HMRC are currently looking for volunteers to assist with this private beta test.More details can be found here.

In addition, HMRC are hosting a number of regional workshops throughout February and March to discuss other ways in which they can engage digitally with agents and taxpayers, including ways to take the Working Together initiative to a digital footing. Although the official deadline for registering for a workshop has now passed, HMRC are still keen for more people to attend, more details can be found here.

By Alison Ward

Alison is one of the Association’s Technical Officers and represents the Association on the RTI Task Force.