RTI Fine £400 - Help

[jlo1983]

Hello,

I am a contractor working in the UK through my Limited Company and I have today received a fine from HMRC which appears to be in relation to Real Time Information Return (RTIR) (the letter content is reproduced below).

I actually sent my accountant what appeared to be a pre-warning letter from HMRC which was along the lines of "act now to avoid penalties" relating to RTIR a few months ago. At this time, I received no response from my accountant and I'm becoming increasingly frustrated.

I was previously working in Norway and selected the accountant as they specifically marketed themselves as a specialist in both UK and Norwegian tax affairs. I therefore assumed this would make the transition working between the two countries easier. I returned back to the UK in July 2014 to work as a contractor. My tax year runs Jan 2014-Jan 2015, therefore I'd hoped to struggle on with my current accountant so they could complete my annual accounts (given the period earlier in the year in Norway). I then planned to move to a mainstream UK Contractor accountant (SJD, Nixonwilliams, InTouch etc).

I am now wondering if I should move accountant sooner, given my predicament.

Does anyone think the below fine may be avoidable?

Many thanks,
John

Update - To make matters worse - just emailed the accountant the letter and he's out of office for the majority of the month (again).

==================================================

Reproduced from a letter I today received from HMRC:

NOTICE OF PENALTY DETERMINATION
About this notice
You are required by law to make an end of year return by 19 May each year or (if you were a Real Time Information employer or pension payer during 2012-13) a real time return of relevant payments made to each of your employees on or, if any, after their final normal payday in the tax year. As you have not made your return on time you are liable to a penalty. This notice gives details of that penalty. If you have an agent or professional adviser you should show them this notice immediately. If you do not understand why you have received this notice please ask me about it. My details are shown above.

How the penalties are worked out
Penalties are £100 for each month (or part-month) for every 50 (or up to 50) employees.
You have been charged penalties from 20 May 2014 to 19 September 2014.
This means that the statutory penalties that you must pay are £400.00.

Payment
Yo u should pay the amount shown on or before 05 November 2014, using the payslip below. The notes overleaf give more information about Paying HMRC.

[Jessica@WhiteFieldTax]

It's a penalty for not submitting the last FPS of the tax year; what used to be P35 pre RTI.

First thing is to get it submitted, even if it is nil. That stops the clock.

Second thing is to check your engagement terms with accountant - (a) whose responsibility is this (b) have you replied to reminders and information requests from them (and you should have been chased if you haven't)

Thirdly, if it was your responsibility, you will need to appeal on "reasonable excuse" eg "I was abroad and thought my accountant was doing it". That appeal is easier if you've acted quickly to file it now you know there is a problem, but really it's a 50:50 gamble. HMRCs interpretation of resonable excuse is quite narrow; there's a right of appeal to First Tier Tribunal (by paper if necessary) and some tribunal chairs are very liberal, others most definitely not - luck of the draw there.

Good luck.

[SueEllen]

Update - To make matters worse - just emailed the accountant the letter and he's out of office for the majority of the month (again).

==================================================

Reproduced from a letter I today received from HMRC:

NOTICE OF PENALTY DETERMINATION
About this notice
You are required by law to make an end of year return by 19 May each year or (if you were a Real Time Information employer or pension payer during 2012-13) a real time return of relevant payments made to each of your employees on or, if any, after their final normal payday in the tax year. As you have not made your return on time you are liable to a penalty. This notice gives details of that penalty. If you have an agent or professional adviser you should show them this notice immediately. If you do not understand why you have received this notice please ask me about it. My details are shown above.

How the penalties are worked out
Penalties are £100 for each month (or part-month) for every 50 (or up to 50) employees.
You have been charged penalties from 20 May 2014 to 19 September 2014.
This means that the statutory penalties that you must pay are £400.00.

Payment
Yo u should pay the amount shown on or before 05 November 2014, using the payslip below. The notes overleaf give more information about Paying HMRC.

The important bit is enlarged for you. For some reason you accountant didn't make an end of year return for your PAYE.

You are legally responsible for your accountant's actions in relation to your company and yourself so if they don't do things then you have to pay the fine. If they agree the problem arose due to their inaction they can reimburse you for the fine.

I suggest you ring him up and speak to whoever is in the office tomorrow during the day. Most accountants have other staff they work with. Even if the staff are unqualified or part-qualified they often understand how to complete these things.

If you get no joy from ringing the accountant's office ring up HMRC and ask them how you can submit it yourself. Then find someone to help you.

Whatever happens don't leave it.

Once you sorted this out change your accountants immediately. Don't wait until the end of the year as it will cost you more money.

[Craig at Nixon Williams]

We received some of the warning letters a few months ago, they had been sent out in error by HMRC – it was the case that the left hand didn’t know what the right hand was doing at HMRC. There was a thread about it on here: http://forums.contractoruk.com/accou...m-penalty.html. We sent a letter to HMRC to tell them that they were wrong and they have been cancelled.

The best course of action from here would be to check with your accountant to see if it has been filed and if it has, then they can write to HMRC to appeal it. If it hasn’t been filed and it is no fault of your own, then your accountant should really be paying any penalty for you.

Hope this helps!
Craig

[jlo1983]

Time to bite the bullet - New accountant required!

Hi,

Many thanks for the replies all - very helpful.

To update you on my situation, I received a brief email reply from my accountant today stating to call his out of office as he's on holiday until the end of the month. I proceeded to called his colleague but was told he was unable to help and I'd have to wait 2 weeks.
I've now decided to bite the bullet and change accountant as they've more than had a fair chance to rectify the situation.

I'm therefore looking for a UK Contracting/ Tax Accountant to assist with getting my company books in order.

Craig - would NixonWilliams be able to assist?

In terms of my Limited company situation:

I was working through my UK Limited Co. as a contractor in Norway until June 2014. Whilst in Norway, I sought tax advice from a local Norwegian foreign tax specialist who were in communication with my UK accountant to determine the best tax strategy. During this period I was living/ commuting back home to the UK each weekend. I also specifically selected my UK accountant at the time as they specialised in both UK and Norwegian tax affairs also.
During this period, I was paying myself a £1000 monthly PAYE in the UK, declaring this in Norway - so paying NI and withholding tax in Norway (and therefore no NI/ income tax in the UK due to double tax treaty). I was also taking dividends, circa £5k per month. All of my Ltd company reporting was filed in the UK, corporation tax paid etc. and is up to date up to 31st December 2013. (Note, my accounting year is currently set up to run 1st Jan - 31st Dec, however, as of the end of this year I'll be looking to align with the UK year end system).
In addition, all of my Norwegian tax affairs are up to date and I still maintain good contact with my Norwegian accountant.

As of July 2014, I started a new contract in the UK and will now continue to work in the UK going forward. As of last month I am now flat rate VAT registered, but my accountant is yet to amend my payslips to reflect that I now need to pay UK NI and income tax, or formally calculate any required VAT payments for me.

So essentially in the sort term I'd be looking for assistance with regard to:
- Contact my accountant to transfer required company information
- Provide immediate support to resolve £400 HMRC fine/ submit any required PAYE paperwork
- Correct PAYE payslips for July 2014 to present
- Submit first VAT payment (period July - September 2014)
- Advise on status of accounts and optimum dividend amount to pay.
- File Company accounts for period 1st Jan 14 - 31st Dec 14 (based on UK reporting however not subject to VAT for Jan-June 2014 whilst working in Norway)
- Amend company tax year end date to align with UK system
- Once all corrected, pay a monthly fee for ongoing UK contractor accounting services.

Thanks!

[Alan @ BroomeAffinity]

Most accountants would be happy to help in these circumstances. Looks pretty straightforward.

[jlo1983]

Thanks - any personal recommendations Alan?

[Alan @ BroomeAffinity]

Modesty would not permit 😄 I hear good things about Nixon Williams, in touch, and sjd. But there are loads of others. Do a bit of due diligence, speak to your colleagues, seek a recommendation from them. Find out if the way they operate works for you.

[Craig at Nixon Williams]

Craig - would NixonWilliams be able to assist?

We can certainly help you with your company; that should be quite straightforward really. We wouldn’t really be able to give any advice on your Norwegian Tax position (though I guess that is why you have retained an accountant in Norway), and we could only provide limited advice on how this would impact your UK taxation.

Feel free to PM me to discuss in more detail.

[TheFaQQer]

Thanks - any personal recommendations Alan?

Why not try Alan at Broome Affinity?

I've never used them myself, but I think Alan occasionally posts around these parts