Removal of late reporting reason code E
03 December 2015
It was confirmed in the Autumn Statement that the two year relaxation on PAYE reporting obligations which allows PAYE information to be reported to HMRC on or before the last payday in the tax month, ends on 5 April 2016.
From 6 April 2016, the relaxation that currently exists for micro employers will not be extended. Employers who were existing employers on 5 April 2014 and had fewer than 10 employees on 6 April 2015, until 5 April 2016 The relaxation currently enables micro employers to report monthly ‘on or before’ the last payday in the tax month, even where they may have multiple pay periods during the tax month. HMRC guidance provides full details of the relaxation. HMRC will be issuing a letter to those employers currently using the relaxation as part of continued support to the employers who will be affected by this removal.
Guidance on GOV.UK has recently been updated in a bid to provide increased clarification about reporting. The Employer Bulletin will continue to include articles to raise awareness and increase understanding and provide some hints and tips.
Software
Late reporting reason code E has been removed from the 2016/17 Data Items Guide, however it remains included within the technical specification in the event that it might be needed in the future for a different use. Payroll software developers have been being asked by HMRC, to remove this late reporting reason from their 2016/17 PAYE product.
As the announcement about the end of the relaxation came at quite a late point in the tax year we wondered what would happen if payroll software retained the late reason code E and it was used in error during 2016-17 – would it cause a submission to be rejected? We approached SDST (Software Developers Support Team) to seek clarification.
SDST responded by saying that if an employer decides (and is able) to report reason code E within a 2016/17 FPS then the submission will not be rejected.
“HMRC are taking a more proportionate approach to issuing penalties automatically and are concentrating on the more serious defaults on a risk-assessed basis. It's clear that there are still some employers in certain sectors who find it difficult to comply with the on or before regulations and we will continue to work with these sectors to support them and ensure we respond proportionately to their individual situation.
- An automated filing penalty will not be charged if the micro scheme reports their payroll on or before the payment date and late reporting reason code E is present in their FPS.
- An automated filing penalty will not be charged if the micro scheme reports their payroll on or before the payment date and late reporting reason code E is not present in their FPS.
- An automated filing penalty may be charged if the micro scheme does not report their payroll on or before the payment date and late reporting reason code E is present in their FPS.
- An automated filing penalty may be charged if the micro scheme does not report their payroll on or before the payment date and late reporting reason code E is not present in their FPS.”