Firms are being reminded that they are now required to file their PAYE returns – forms P14 and P35 – online by 19 May.
Under the rule change, all employers, irrespective of size, are obliged to submit their returns online by 19 May. Those that file on paper could be subject to a penalty charge.
Concerns, however, have arisen over the application of the ruling to those businesses that have between one and five staff.
Statements from HM Revenue and Customs (HMRC) have suggested that all employers are subject to the new requirement that the returns be made online.
But the only indication that very small employers may be exempt from the penalty charge has come from references to Income Tax (Pay As You Earn) Amendment No 2 Regulations 2009. On the list of penalties for non-compliance, the fine for employers with one to five workers is shown as £0.
To clarify matters, as of this year, 2009/10, all employers come under the requirement that they file their end of year annual return (P35 and P14 forms) online. In the majority of cases, if they fail to do so they will face a fine.
Some employers will still be allowed to file paper forms. These include employers permitted to manage their PAYE using the simplified deduction scheme; members of faiths whose beliefs are incompatible with electronic communications; employers who take on someone to provide care or services at or from their home; and limited companies that submit a return only to file an entry in box 28 of form P35.
Businesses with five or fewer employees
Employers with five or fewer staff are obliged to file their employer annual returns online, other than in the case of one of the exemptions listed above.
However, for just one year – 2009/10 – if an employer with one to five employees does file in paper form (and by the due date) they will not face a penalty.
This does not amount to an exemption. But, in effect, very small employers have an extra year in which to file online. Those that do submit a paper return will receive a letter from HMRC setting out the requirement that they must file electronically. But they won’t get a fine this year.
Irrespective of the changes, employers who file returns late, no matter their status or size, will be liable to a late filing penalty.