Readers will be aware that Employers must submit their Annual Return online by 19 May 2010 to avoid penalties. However, employers with five or fewer employees can, for 2009-10 only, file the return on paper without incurring a fine (but it must be done by 19 May), this year only the penalty for failing to file online is reduced to nil.
This year (2009/10), almost all employers must file the Annual Return (P35 and P14s) online. Failure to file online will result in a penalty notice being issued by HMRC. The return must be filed with HMRC by 19 May 2010.
The only employers who are permitted to file on paper are:
- employers entitled to operate PAYE using the Simplified Deduction Scheme for domestic employees (provided they have not previously received a tax-free payment for online filing);
- practising members of religious societies or orders whose beliefs are incompatible with the use of electronic methods of communication;
- employers who employ someone to provide care or support services at or from their home (subject to a number of conditions); and
- limited companies filing a return solely to submit an entry in box 28 of form P35 ('CIS deductions suffered') (these returns cannot be filed online).
More information about these limited online filing exemptions can be found on the HMRC website here
Small Employers (5 or fewer employees)
Although employers with 5 or fewer employees are required under the PAYE Regulations to file their Employer Annual Return online (unless one of the above paper filing exemptions apply), if such an employer does file the return on paper (and on time) no penalty will arise. For 2009-10 only, the penalty for failing to file the return online is NIL for employers with 1 to 5 employees. Thus, although there is not an exemption for employers with 5 or fewer employees, the practical effect for 2009-10 is that if such an employer sends their return to HMRC on paper, no penalty notice will be issued (instead, HMRC will write to explain the obligation to file online). This is confirmed by HMRC in their weekly NPS update reproduced above.
The late filing penalty (i.e. failure to file by 19 May) does, however, continue to apply. Hence, if for any reason a small employer cannot file the Employer Annual Return online by 19 May they should, at least, file it on paper by 19 May to avoid a late filing penalty.
No return to make (online notification facility)
If an employer has not had to maintain any form P11s (or equivalent) for the tax year, there is no need to complete the Employer Annual Return. BUT it is necessary to tell HMRC that no return is needed. Otherwise, HMRC will automatically issue penalty notices. Notification may be given to HMRC in writing or by telephone. It is, however, also now possible to use a new online facility to notify HMRC that a return is not required (if this method is used, HMRC should immediately send an acknowledgement e-mail to confirm that the declaration has been received and a further e-mail when it has been processed).
More information on end of year PAYE procedures can be found on the HMRC website here