IR35 reporting concession for RTI

Due to various reporting dates under RTI and IR35 rules HMRC allows a late reporting concession.

This is a freeview 'At a glance' guide to the late reporting concession.

• Under PAYE Real-Time Information (RTI), payments of salary should be reported on or before contractual pay is due to an employee.
• Under the Rules for IR35 companies are required to report a deemed payment of salary by 5th April.
• Many IR35 companies are unable to calculate the deemed payment by that date and so HMRC allows a late reporting concession.

This gives three potential reporting dates:

• If you are paying a salary on a regular basis, you will be reporting each payment under RTI.  You may also need to make a final deemed payment calculation at 5th April, and if there is any adjustment to pay you must pay that by 19th or 22nd April.
• If you only calculate under IR35 once a year, you report the deemed salary by 5th April and make the payment by 22nd April.
• If you cannot make the calculation by the required date, the concession allows you to make a provisional calculation and report the actual amount by the following 31st January.

HMRC's concession

Reporting arrangements for a Personal Service Company (PSC) within IR35:

• Payments of salary made during the year should be reported on a Full Payment Submission (FPS) on or before the time of payment.
• If no payment of salary is made in the month, then the PSC should submit an Employer Payment Summary (EPS) so that HMRC is aware not to expect an FPS or any payments that month.
• On the last FPS or EPS during the tax year, the PSC should declare that it is their final return of the year and answer the questions currently found on the P35.
• The final FPS will include a specific question to indicate that this is a Service Company and has operated the Intermediaries legislation otherwise known as 'IR35'.
• Employers who have operated IR35 should answer this question positively which will then alert HMRC that the scheme falls into the special arrangements for IR35.

Payment arrangements

• Payments of deductions to HMRC should be made on the same basis as usual; quarterly or monthly dependent on the size of business by the 19th or 22nd of the month.
• The provisional calculation of the deemed payment for PSCs should be reported on an FPS 'on or before' 5 April.
• HMRC expect any outstanding deductions on the deemed payment that could not be calculated before 19 April to be paid by the following 31 January. Interest will apply, but penalties for late payment will not be charged.
• Where a provisional payment of tax and National Insurance Contributions (NICs) has been made because it has not been possible to accurately calculate the deemed payment and deductions by 19 April, then any adjustments should be reported via an Earlier Year Update (EYU) submitted electronically to HMRC before the following 31 January. Late filing penalties will not be charged.

The concession is reviewed annually by HMRC and as a concession could be withdrawn at any time. HMRC has stated that notice will be given if it is to be withdrawn.

Check your software

Some payroll software does not allow Earlier Year Updates.