Beware of early RTI returns

Sep 27, 2022

Employers must send their PAYE reports to HMRC on or before the day they pay their employees. The full payment submission (FPS) report sets out what has been paid and the deductions made.

If the FPS report is more than three days late HMRC will send you an education letter and if it is late again you may well get a penalty.

With a regular workforce paid the same amount each month it is tempting to prepare and submit the FPS reports well in advance of the payment dates but this can cause problems.

HMRC’s computer is not programmed to read the dates on each FPS report; it only checks that the correct number of FPS reports has been submitted for each payroll period.

For example for monthly payrolls the computer expects to receive 12 FPS reports submitted within the appropriate months. If additional FPS reports are received in a month HMRC make no attempt to allocate those reports to the correct month. If HMRC do not receive the FPS report in the period it relates to, or shortly afterwards, they assume that the report is missing and automatically issue a penalty.

The HMRC approved software (PAYE Basic Tools) permits employers to submit RTI returns early and there is nothing in the law to prohibit you from being super-efficient and submitting the FPS report early. However the HMRC computer may consequently generate unnecessary penalties.

If you receive a penalty for submitting your FPS report late but you think it was on time or early please contact us without delay. We can help you appeal against any incorrect penalties.

Other Autumn Tax Briefing 2022 articles

Paying PAYE

Working at home deductions

Electronic sales suppression

Cost of travelling to work

Reporting UK property gains

Paying your income tax bill

Loans to employees