BUSINESSES are being warned to prepare themselves for thousands of pounds in penalty charges if they submit late payroll submissions.

Since October 2013, it has been compulsory for all employers to submit PAYE National Insurance contributions and student loans information electronically via the internet to HMRC on, or before, they pay their employees, instead of just once a year, a scheme known as Real Time Reporting. The government initiative was introduced to improve the accuracy of PAYE, reducing the need to send out corrections for overpayment or underpaying and the possibility of fraud. However, last month HMRC introduced penalties for employers who report this payroll information late.

Laura Owen, manager of Worcester's CB, Chartered Accountants payroll bureau explained: "It used to be the case that penalties were only applied to late filing at the end of year. However, under the new rules penalties will now be issued on a monthly basis. For example, if you are found to have filed your monthly payroll information late, and have just one employee, you can expect a monthly penalty of £100, rising to £400 if you employee 250 employees or more.

"HMRC also have the ability to charge an additional penalty of five per cent of the tax and National Insurance that employers should have reported, if the submission is more than three months late. The penalty scheme introduced on October 6 applies to employers with 50 or more employees. Employers with 50 employees or less will be subject to penalties from March 6, 2015. The key to successful implementation and compliance of RTI is simple…don’t leave it to the last minute."