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Payroll Update: PAYE & Construction Industry Scheme

HMRC continues risk based PAYE penalties for 2017-18

Following a review of the effectiveness of the risk-based approach to late filing PAYE penalties, HMRC has announced that it will continue with this approach for the 2017-18 tax year.

Consequently late filing penalties will continue to be reviewed on a risk-assessed basis instead of being issued automatically. The first penalties for the tax year beginning 6 April 2017 were issued in September 2017.

Penalties will not be charged if Full Payment Submissions (FPSs) are filed late but within 3 days of the payment date and there is no pattern of persistent late-filing. It is important to note this is not an extension to the statutory filing date which remains unchanged.

Employers must still file their submissions by each due payment date except in specified circumstances. Employers persistently filing after the statutory filing date but within three days may be contacted by HMRC and could be considered for a penalty.

Late payment penalties will also continue to be raised on a risk assessed basis rather than automatically again and the focus will be on persistent late payers.

The risk-based approach to PAYE penalties will continue to be reviewed by HMRC beyond 5 April 2018 and will focus on penalising employers who deliberately and persistently fail to meet statutory deadlines, rather than those who make occasional and genuine errors for which other responses might be more appropriate.

Simplifying PAYE Settlement Agreements

There are some changes to the PAYE Settlement Agreements (PSA) process which will start from 6 April 2018.

HMRC has announced that it plans to:

  • Provide an online digital service for PSA submissions and payment
  • Remove the need for an annual upfront PSA agreement
  • Improve and clarify PSA guidance.

The new PSA digital process will be developed in response to the PSA consultation exercise that took place in 2016. We will let you know more when HMRC gives us an update on its progress.

Construction Industry Scheme

Limited company subcontractor’s Repayment iForm.

Limited company subcontractors that had deductions taken from Construction Industry Scheme (CIS) payments and needed to claim a repayment after the end of the tax year used to have to write to HMRC in order to make their claim. Now there is an electronic form available which will make the CIS repayment claim process much more efficient.

This means that a limited company subcontractor can now log into the Government Gateway and submit their claim using the
Repayment iForm, which will be the most direct route to the right team in HMRC.

It you would like to discuss any of the above topics in more detail, please contact Joanne Nieman below.