The one-year RTI 3-day easement was introduced in tax year 2015/16.  It was extended into tax years 16/17, 17/18 and now 18/19...

For the benefit of myself and the profession, I want to detail all of this:

2015/16

On 17 February 2015, HMRC said that they would not start their late filing penalty regime if the Full Payment Submission (FPS) is late but sent within 3 days of the payment date that is declared.  This is as long as the employer is not a deliberate or persistent late filer.

At the time and in line with their 02 February 2015 Discussion document and Responses document on 17 September 2015, HMRC said that they would review the RTI penalty regime by 05 April 2016.

2016/17

Late in the 2015/16 tax year, HMRC made an announcement to certain members on the Taxpayer Data Standards Forum (TDSF) saying:

‘Following a review of the three day easement and risk-assessed approach adopted last tax year which has seen a significant reduction in returns filed late, HMRC have decided to continue this approach for a further tax year. As a result employers will not incur penalties for delays of up to three days in filing PAYE information during the 2016-17 tax year.

The three day easement is not an extension to the statutory filing date which remains unchanged. Employers are required to file on or before each payment date unless the circumstances set out in the ‘sending an FPS after payday guidance are met. HMRC won’t charge a late filing penalty for delays of up to three days after the statutory filing date, however employers who persistently file after the statutory filing date but within three days, will be monitored and may be contacted or considered for a penalty.’

On 23 May 2016, their communication to the wider community said:

HMRC won’t charge a penalty if: 

  • your FPS is late but all reported payments on the FPS are within 3 days of your employees’ payday (this applies from 6 March 2015 to 5 April 2017) however employers who persistently file after the payment date but within 3 days may be contacted or considered for a penalty’

At the time, I commented that there was this confusing discrepancy between the actual date that the FPS had to be filed – was it the payment date or was it the payday, as these are two different things?  The payment date is the date declared on the FPS but the payday is the date that the employee is actually paid.  HMRC’s systems issue penalties based upon the payment date but the RTI legislation says that the FPS must be filed on or before the payday!

Further, the HMRC Responses document on 17 September 2015 indicated the desire to consult further and legislate as part of Finance Bill 2017.  A Making Tax Digital consultation followed with Responses in December 2017.  There was no 2017 legislation but there was the promise of ‘further consultation in the Summer of 2018’.

2017/18

For 2017/18, the situation was unclear in the easement until I came across an update on 07 September 2017 by accident.  This changed the narrative to:

HM Revenue and Customs (HMRC) won’t charge a penalty if: 

  • your FPS is late but all reported payments on the FPS are within 3 days of your employees’ payday (this applies from 6 March 2015 to 5 April 2018) however employers who persistently file after the payment date but within 3 days may be contacted or considered for a penalty

I never did find an official announcement.

2018/19

Again, seemingly without an official announcement and no mention in the Employer Bulletin issued the previous day, the narrative has changed again to:

HM Revenue and Customs (HMRC) won’t charge a penalty if: 

  • your FPS is late but all reported payments on the FPS are within 3 days of your employees’ payday (this applies from 6 March 2015 to 5 April 2019) however employers who persistently file after the payment date but within 3 days may be contacted or considered for a penalty

So, the 3-day easement and the confusing discrepancy between the payment date and the payday continues for tax year 2018/19.

What next?

This is a clear indication that HMRC have no intention of charging penalties automatically for tax year 2018/19.  This is good to know, as clearly they have not made a decision on what to do anyway.

Will we get another late filing consultation and draft legislation in the Summer of 2018 as promised in December 2017?  Or, was this part of HMRC’s Making Tax Digital for Business ‘Process Platform’ that has now been stopped or paused because of EU Exit?

We can only wait and see.  I do feel that HMRC really need to change this narrative and clear up the confusion between the payment date (that is declared on the FPS) and the payday (that is not declared on the FPS).

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