HMRC issues 'urgent' PAYE alert

HM Revenue & Customs seems determined to give businesses a fair chance to get their affairs in order ahead of compulsory online PAYE filing.

HM Revenue and Customs (HMRC) seems determined to give businesses ample time to get their affairs in order ahead of the implementation of compulsory online PAYE returns.

Earlier this month, the department issued an "urgent alert" to businesses via the government's News Distribution Service warning firms about the forthcoming "important changes".

HMRC is also writing to all UK employers to remind them paper filing is "no longer an option" for Employer Annual Returns.

Instead, businesses have been informed that they must complete an online return by May 19th or face paying a penalty.

The announcement also contained information that, from May this year, a new range of penalties are to be introduced for late filing of PAYE returns, including National Insurance contributions, student loan deductions, Construction Industry Scheme deductions and income tax.

HMRC urged businesses that may have difficulty meeting the payments to call its Business Payment Support Service, before the payment is due, on 0845 302 1435.

Businesses that have concerns about the new system could also benefit from contacting an accountancy firm for guidance.

Stephen Banyard, from HMRC, said: "Major changes to PAYE filing and payment are only a matter of weeks away, so employers need to make sure they're well prepared for them. We will be writing to affected employers over the coming weeks, so please look out for this information and take the time to read it.

"One key thing to flag up at this stage is that employers do not need to keep a hard copy of their Employer Annual Return if they file it online themselves. As a consequence, HMRC will be reducing its stocks of hard-copy PAYE forms – P35s and P14s. So please carefully consider your PAYE stationery requirements before ordering paper forms from HMRC."

Following the announcement, the Low Income Tax Reform Group (LITRG) expressed concerns that a number of the UK's smaller businesses may be unprepared for the changes.

For instance, the organisation urged business owners to ensure they had the necessary software in order for them to complete their online transactions.

The group highlighted the fact that there are several different software platforms catering for enterprises of various sizes.

LITRG explained that businesses with less than 50 employees would be able to complete the forms using the software on the HMRC website, while those with less than ten members of staff would be required to use the free Employer CD-ROM, which contains a P11 calculator and will provide businesses with the tools necessary to directly submit the return once the calculations have been made.

However, neither of these two models can be used by businesses with a workforce more than 50-people.

These businesses will need to purchase commercial software programmes in order to complete their returns.

"Many providers sell PAYE products and those which have been accredited are listed on HMRC's website," said the LITRG.

The group issued the software advice as part of a list of tips amid concerns that a number of firms would be unprepared for the changes and could end up with penalty fines of up to £3,000.

"For the first time, employers with 50 or fewer employees will no longer automatically receive a paper P35 end of year return from HMRC and … must now file these forms online together with accompanying P14s for all employees by May 19th," a statement from the LITRG said.

The statement also carried a warning for businesses to ensure they are registered for the online service in time for the deadline.

"You will need to have to hand your employer PAYE reference number and your Accounts Office reference number to do so. It can take up to a week for the activation code to come through so this needs to be done soon," the group explained.