With its first birthday already passed, for many recruiters Intermediary Reporting is already part of the routine administration of finance, much the same as VAT.
But what if it isn’t? What if you haven’t submitted your quarterly reports for the temps you pay without operating PAYE?
Well, you could be in a bit of bother but all is not lost!
The good news is HMRC have confirmed they did not send out any penalty notices for incorrect, late or non-submission in the first year. The bad news is they have now turned on that function and incorrect, late or non-submission will now attract a penalty.
So, what are the penalties? £250 for a first offence, £500 for a second and £1,000 for each subsequent offence. If there has been more than 12 months since an offence, the penalty drops back to £250.
With 4 submissions now passed, the potential penalty could be an eye-watering £2,750!
So if you haven’t submitted any reports, what are your choices?
With a potential bill of £2,750, you may be tempted to commence reporting now and avoid submitting the historic reports. The problem with this is the reporting itself. With assignment start and end dates required to be recorded, it will almost certainly be necessary to either manipulate, omit or falsify information in order not to immediately alert HMRC to the fact that earlier reports were due. This is a very dangerous option. You may get away with it, but if caught, false statement could become a criminal matter. A very risky gamble indeed.
The alternative is to submit all data as you should and wait for the penalty notice.
HMRC were unable to confirm whether, because of the first year moratorium, a penalty notice would be sent for 1 offence (ie, the latest offence) or all offences.
HMRC did confirm that as soon as you receive a penalty notice you should write and appeal. They confirmed all appeals will be referred to a “real person” for sensible consideration.
So are there any grounds for optimism? Possibly! It would be somewhat unjust for HMRC to levy a penalty for all missed deadlines, when under the first year moratorium there were no penalties. Secondly, there has been no direct communication by HMRC to employment businesses that the legislation exists. It was within the ability of HMRC to either write to all companies operating PAYE or all businesses registered as an employment business at Companies House. But they did neither. Informally, HMRC now expect all relevant businesses to be aware of the legislation but do not state how they expect you to know.
Whilst membership of TEAM may lessen the ability to plead complete ignorance, with no formal correspondence from HMRC, it remains a compelling argument that there was no awareness of your obligations.
With no formal communication from HMRC it is probable a high number of recruitment businesses will remain unaware and end up receiving penalties. If you are in the position of having not implemented the reporting yet, the longer it is left, the more expensive it is likely to become, so with the next deadline on 5th August, the time is now to get it implemented!