In Elite Hand Car Wash v HMRC [2016] TC 05431 the First Tier Tribunal (FTT) rejected a taxpayer’s claim that HMRC’s RTI reporting relaxation for micro employers meant it did not have to file online.

  • Since 6 April 2013 under PAYE real time information (RTI) reporting most employers have had to report to HMRC on or before the date on which they paid their workers.
  • In August 2014 HMRC announced a relaxation for employers with nine or fewer employees: until April 2016 they could report PAYE information on or before the last payday in the month, rather than in real time.

The taxpayer failed to deliver their RTI final return for 2013/14 on time, and were issued with a penalty for £400.

It appealed on the grounds that:

  • The relaxation for micro-employers meant that it did not have to file returns online.
  • It had asked for paper returns but not received them.
  • The penalty should be waived as the company was going through a ‘difficult period’.

The FTT rejected the appeal and upheld the penalty:

  • The relaxation was designed to allow small businesses finding RTI difficult to submit returns monthly, rather than in real time. It did not waive the requirement to file online.
  • The taxpayer did not have a reasonable excuse: a reasonable taxpayer would not have taken the view that the relaxation meant they could file paper returns.
  • The legislation does not permit a penalty to be cancelled on the grounds of inability to pay.


The taxpayer in this case is not the first small employer to find RTI confusing, and is unlikely to be the last.

In September 2016 HMRC published their RTI research findings. This looked at what drives reporting errors and how HMRC can help micro-employers to meet RTI reporting requirements.

The report concluded that dates and deadlines are the biggest single challenge for employers and the main cause of error.   

Expect to see further cases coming through the system as HMRC rolls out more penalties in this area.


Case reference: Elite Hand Car Wash v HMRC [2016] TC 05431

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Penalties: RTI (Real Time Information) for PAYE

RTI: micro employer’s exemption ended in April 2016

RTI: Real Time Information for PAYE