How can an early tax return become a late tax return?

12 July 2022

A company had been having problems getting their Real Time Information (RTI) PAYE returns in on time. They decided to avoid problems by bulk submitting the next few months’ returns at once. They happily received confirmation of ‘success’ from HMRC and relaxed, only to find that months later, they received a series of fines for late submission of these returns. They were naturally confused, and appealed, with this appeal taken to the First-tier Tribunal.

It became apparent that, although not clearly set out in the paperwork, RTI returns can only be submitted in a specific period, from the beginning of the month concerned. The ’success’ messages they had received merely meant the file had been delivered, not that the file had been matched to the correct period. There appeared to be no mechanism to tell them that filing had failed and hence, if not resubmitted at the correct time, the returns would be deemed late.

Luckily the Tribunal agreed that the taxpayer had not been able to know the above, worryingly it was not included in HMRC guidance, and hence they had a reasonable excuse for not immediately refiling the returns, so the Tribunal waived the fines.

The fact remains, when is an early return a late return? When HMRC say it is. Be careful not to be too keen.