The one-year RTI 3-day easement was introduced in tax year 2015/16. It was extended into tax years 16/17, 17/18, 18/19 and now it looks as though it has been extended with no end date. This article details its evolution.

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 with the earliest possible date for legislation being Finance Bill 2017.

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’

This however leads to confusion as to 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 narrative changed 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

However, we are not aware of an official announcement.

2018/19

For 2018/19 the narrative 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

Again, without an official announcement that we are aware of.

2019/20

On 11 July 2019, the narrative has been changed again on the ‘What happens if you do not report payroll information on time’ page to:

HMRC will not charge a penalty if:

  • your FPS is late but all reported payments on the FPS are within 3 days of your employees’ payday, however employers who regularly file after the payment date but within 3 days may be contacted or considered for a penalty

There is no mention of an end date to this concession.

This seems to be a clear indication that HMRC have no intention of charging penalties automatically for tax year 2019/20 and onwards (until that changes of course).

There still remains confusion between:

  • The payment date (that is declared on the FPS) and
  • The payday (that is not declared on the FPS)

By law, the FPS must be submitted on or before payday.  However, it is the payment date field that is important for the operation of the Universal Credit and, importantly, is the field that HMRC use to see if someone has filed late.

The 3-day concession, therefore, should be read as ‘HMRC will not charge a penalty if the FPS is submitted within 3 days of the payment date that is declared on the FPS’ – as long as the FPS is not regularly filed late.

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