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Penalties for making a late or incorrect PAYE submission
Penalties for making a late or incorrect PAYE submission
Rebecca Russell avatar
Written by Rebecca Russell
Updated over 4 months ago

Late Returns

When are penalties charged for late returns?

You can be charged a penalty if:

  • Your full payment submission (FPS) is late.

  • You didn't send the expected number of FPS.

  • You didn't send an Employer Payment Summary (EPS) in a month when you didn't pay any employees.

You won't be charged a penalty if:

  • Your FPS is late, but within 3 days of your employees' pay

  • You're a new employer and sent your FPS within 30 days of paying an employee.

  • It's your first late return in the tax year.

How much will an employer pay per PAYE scheme?

The penalty depends on how many employees you have. Penalties can be charged for each PAYE scheme where a submission was sent late.

Number of employees

Monthly penalty

1 to 9

£100

10 to 49

£200

50 to 249

£300

250 or more

£400

For more information about late submission penalties and the appeal process, please refer to HMRC's guidance.

Inaccurate Returns

When are penalties charged?

Penalties may be charged if the inaccuracy results in tax being unpaid, understated or over claimed, and it was the result of a careless, deliberate and/or concealed mistake. You may also be liable for the penalty even if an employee or an advisor made the mistake.

You won't be charged a penalty if you've shown reasonable care, such as keeping accurate records, or checking with a tax advisor or HMRC.

Disclosing an inaccuracy

Inaccuracies fall into two categories:

  • Unprompted Disclosure: You told HMRC about the inaccuracy before they noticed or started their checks.

  • Prompted Disclosure: HMRC identified the inaccuracy, or had already started their checks.

An unprompted disclosure can reduce a penalty to nil, otherwise the penalty for an unprompted disclosure is less than for a prompted one.

What is the penalty charge based on?

The penalty charge is a percentage of HMRC's lost revenue based on the type of behaviour that resulted in the inaccuracy:

Type of behaviour

Unprompted disclosure

Prompted disclosure

Reasonable care

No penalty

No penalty

Careless

0% to 30%

15% to 30%

Deliberate

20% to 70%

35% to 70%

Deliberate and concealed

30% to 100%

50% to 100%

The penalty can be reduced depending on the assistance you provide to resolve the inaccuracy:

  • Telling: up to 30%

  • Helping: up to 40%

  • Giving access to records: up to 30%

For more information about inaccurate reporting and penalties, please refer to HMRC's guidance.

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