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Auto Enrolment Enforcement & Penalties

July 2017

Most of us have now heard of or been involved with auto enrolment. This is the new government initiative to help everyone save for their retirement. On your staging date it is mandatory for all eligible workers to be enrolled on to a work place pension scheme where both the employer and the employee must contribute. Auto enrolment is a phased process with the last remaining employers rolling into the scheme in February 2018. If you are a new employer on or after 1st October 2017 you will immediately have legal duties for auto enrolment for any eligible workers.
As auto enrolment is mandatory there are various discretionary powers that the pensions regulator has at his disposal to ensure that employers comply. They are even able to take criminal proceedings against employers that are wilfully non compliant!
The regulator is in the first instance likely to issue a statutory notice to an employer if they have breached their duties and action is needed to remedy the breach. This may result in the employer paying both the employees and the employer’s contributions or interest charges if contributions have been incorrectly deducted or not deducted at all.
The next step would be a fixed penalty notice if the employer had failed to comply with the statutory notice or they have contravened the pensions act section with an offence that is punishable with a fixed penalty notice. The fixed penalty is £400 and it must be paid within a specified time period.
If the statutory notice and the fixed penalty notice have not worked, the regulator can issue an escalating penalty notice. The fines are escalated daily based on the number of employees and they are eye watering as you can tell from the table below!

Number of persons                                  Prescribed daily rate (£)
1-4                                                                                50
5-49                                                                             500
50-249                                                                        2,500
250-499                                                                      2,500
500 or more                                                              10,000

Please make sure that you comply with all of the auto enrolment legislation. To avoid expensive mistakes Pabsco are happy to help with your auto enrolment payroll requirements.

Making Tax Digital (MTD)

March 2017

The government is planning to digitalise the tax system from April 2018 onwards with a phased start for the various taxes.
The main aim of making tax digital (MTD) is to simplify the tax system and reduce the number of taxpayers that need to submit self assessment returns moving forward.
The principal of MTD is that you will have an online tax account that will keep track of all of your individual and business tax automatically. These accounts will be submitted to HMRC on a quarterly basis to estimate the taxes that are due.
The system is intended to be more transparent and prevent the current number of avoidable taxpayer errors that are made by small businesses.
The good news is that any third party information received by HMRC will automatically be available in your online tax account so there will no longer be the need to hunt for your P60 at the end of the year! The bad news is that the quarterly submissions will need to be filed using software that has this facility.
The relevant dates for MTD and the relevant taxes are as follows:
• April 2018 for income tax if you are self-employed and above the VAT registration threshold
• April 2019 for all VAT and for income tax if you are self-employed and below the VAT registration threshold
• April 2020 for corporation tax
• Partnerships with a turnover in excess of 10m, will be deferred until 2020 due to the complexity of their affairs

Anyone with a turnover of £10,000 or less will be exempt from MTD unless they have a secondary income that takes them over the £10,000 threshold or they wish to voluntarily participate in MTD. This includes sole traders, self employed, pensioners or people with income from property.
Businesses will be able to continue to collate their records on spreadsheets but this will now need to be linked to software that has the facility to send submissions to HMRC.
Small businesses that are eligible for simplified accounts will be able to continue to submit their income, expenses and profit in the same manor.
There will only be some small exemptions for businesses that are genuinely unable to get online due to individual circumstances such as disabilities or internet access due to remote geographical location.
These huge changes will affect millions of individuals and businesses and the agents that represent them. Further information will follow as HMRC outlines more details but please contact us for further advice on how this may affect you and your business.
We will be here to help you at any stage of these developments.

HMRC – Making Tax Digital