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A mistake on a single P11D could cost an employer £3,000, KPMG has warned, and this might quickly become a much larger sum while harming the business's relationship with the taxman.
As the 6 July P11D filing deadline approaches, the financial services provider has alerted companies to the fact that while a late submission will result in a penalty of £100 from HMRC, errors may mean a fine 30 times bigger — the maximum the Revenue can impose per form.
Each fine is per incorrect P11D submitted, so the penalties can soon add up, noted John Chaplin, employment Tax Director at KPMG UK.
Such penalties have in the past been rare, but are likely to become more frequent, he added.
His company observed that 'the pain for the employer' does not end with a penalty. It can also lead to an increased risk-profile with HMRC, 'potentially affecting the way in which the department deals with the firm in the future'.
Mr Chaplin commented: 'Historically, HMRC have not levied the fines and penalties available to them other than in exceptional circumstances.
'However, we suspect this may well change this year as under a new “risk-based” approach, we are seeing tax inspectors taking a much more adversarial stance and showing a greater appetite for imposing stricter penalties.
'Potentially, an employer could find themselves being fined over and over again for the same mistake if they have made it repeatedly on a number of employees' P11Ds.'
