The Pensions Regulator has netted more than £6 million in fines following compulsory pensions auto-enrolment for employers.
The Regulator has issued more than 4,673 fixed penalty notices (FPNs) of £400 in the first three months of 2017. These were to employers who ignored their pensions auto-enrolment obligations.
1,043 Escalating penalty notices (EPNs) were also issued. These were to employers who have ignored their FPN. One employer was fined over £22,000.
Court proceedings follow the failure to respond to an FPN.
Over 500,000 employers are now within auto enrolment. 14,502 FPNs and 2,517 EPNs have been issued, meaning that about 12,000 employers who were non compliant appear to have now been successfully mandated into setting up new schemes. Under a naming and shaming policy, employers who have failed to pay their EPNs and who are subject to court proceedings are published on the website.
By the looks of things it appears that around 2.3% of employers have so far been non-compliant in setting up auto-enrolment. If we put these sort of statistics into Making Tax Digital for business, then HMRC could be looking at reapping the rewards of a minimum of £8 million from MTD. On on the other hand, as most employers run payrolls and so can master software, many mandated into MTD will never have used software before, and so MTD fines are likely to be considerably higher.
What are the actual costs of auto-enrolment?
A straw poll of our accountant/payroll subscribers this week suggests that most of you are charging on average £5 per head per month to track and maintain autoentrolment for your clients. Some of you charge additional set-up fees but these are now billed as part of the cost if you are setting up a new payroll scheme.
A £400 penalty likely to exceed the annual cost of running the scheme for most micro employers.