If the form P35 for a PAYE scheme is not filed by 19 May after the tax year-end, a penalty of £100 is levied for each month the return is late, and for every batch of up to 50 employees in the PAYE scheme. In past years HMRC has dispatched the first penalties for late submission of forms P35 when at least £400 in penalties has accrued. This approach has been criticised by the tax professional bodies and by Tax Tribunal judges.

For the 2011/12 returns, HMRC has promised to send reminders employers by early May 2012, where a P35 form has not been filed. Interim penalty letters will be issued from 31 May 2012, warning the employer that a penalty for a late P35 has accrued, and how to avoid a higher penalty. The actual penalty notices will still be issued in September.

The guidance for submitting the P35 online will also be amended to alert employers to the danger of submitting test returns in place of live submissions. HMRC staff on the employer helpline will also be instructed to tell new employers about the filing deadlines.

If you’ve just received a penalty notice for late submission of your 2010/2011 P35, then it can be appealed. Contact us for details.