Enforcing the Minimum Wage

As of this month, small businesses with employees will face the threat of fines if they are late reporting Real Time Information (RTI) on their payroll. This system of fines was already rolled out last October for larger businesses (those with over 50 employees).

About the Fines

Employers who are late with their Full Payment Submission (FPS), failed to send the full number of FPSs required will face fines. Businesses who do not pay any employees but forget to file their Employer Payment Summary (EPS) will also be subject to the fines. This latter fact has attracted no small amount of controversy, due to the fact it means businesses which make no payments whatsoever can also be fined – though HMRC does include the reasonable excuse of “no longer have any employees or no payments to employees.” There are also exemptions for new employers who file an FPS for the first time within 30 days of making a payment to an employee, and for the first failure in the current tax year.

For businesses employing 0-9 people will face a fine of £100 for each month in which they fail to submit their FPS on time. This rises to £200 for those with at least ten employees, and £300 for those with 50 or more. Businesses with more than 250 employees will face fines of £400 a month. There will also be an additional charge when submissions are late by over three months, equating to 5% of the total tax and national insurance that was not reported on time.

Avoiding Fines

The best way to avoid these fines is simply to ensure that you always keep on top of your payroll solutions processes and that all RTI is reported to HMRC on time. As payroll can be a complicated and time-consuming process for non-specialists, the threat of fines constitutes further compelling reason to consider outsourcing this aspect of your business to a professional. Using a specialist payroll services will help ensure that all processes are handled properly and expertly, and as part of a well-thought-out and dedicated process. As a result, you can be sure that everything will be done on time and that all submissions will be made promptly in order to avoid fines.

If a submission is late but with good reason, then you will be entitled to challenge the fine on the grounds that you have a “reasonable excuse.” Examples include death and ill health, along with serious and unexpected things such as fire, flood and natural disasters which can seriously impact the running of your business. IT difficulties can also constitute a reasonable excuse, and in some cases if a software package is at fault then the supplier of that package may cover the fine should the challenge prove unsuccessful.