Employment Intermediaries – are you reporting or running the risk of penalties?

04 August 2016

Following an introduction year delivered with a ‘light touch’ approach to penalties. HMRC will begin to apply penalties to Employment Intermediaries who fail to submit a report each quarter from the period ending 5 August 2016 where they have not operated PAYE on the workers payments.

Penalties will begin from 6 August for Employment Intermediaries who fail to report information to HMRC of all workers they place with clients where the intermediary does not operate Pay As You Earn (PAYE) on the workers’ payments.

The return is a report (or reports) that must be sent to HMRC at least once every 3 months – it is the intermediary that has the contract with the client that is responsible for sending the report (or reports).

Intermediaries can decide how frequently to upload and send reports. This could be weekly, monthly, once for each period, or whatever fits in best with how they work.

HMRC’s report template must be used to create the reports. HMRC has provided an online service to upload and send reports.

Penalties

5 August 2016 is the deadline for the reporting period 6 April to 5 July 2016. If the report is late a penalty will be automatically charged.

The amount of the penalty is based on the number of offences in a 12 month period:

  • £250 will be charged for the first offence,
  • £500 for the second offence
  • £1,000 for the third and later offences.
  • To a maximum of £3,000 per quarter.

If a report is submitted late, but at least 12 months have passed since the last time a report was late, it will be treated as a first offence.

If a report is submitted that is incorrect, penalties may apply. An incomplete report, for example a report where any information is missing, will count as an incorrect report. Penalties for incorrect reports will be determined on a case-by-case basis.

If an incorrect report is replaced before the deadline of the next reporting period without being asked to, HMRC will consider this when they decide if a penalty has to be paid.

Where there is a continued failure to send reports, or where reports are frequently sent in late, a penalty of up to £600 per day that the report is late (more than 30 days), may be charged.

There is a right of appeal and details will be included within the penalty notice.

Employment Intermediaries Reporting requirements provides full details.