More than 3,500 employers in East Anglia which have yet to adopt the taxman’s new system for filing Pay As You Earn (PAYE) Income Tax data are being warned that they could face a fine.

HM Revenue & Customs (HMRC) is launching an email campaign targeted at employers who are not yet using the system to file PAYE returns as and when tax is deducted rather than at the year-end.

The Real Time Information (RTI) system, which began in Apil 2012 with a pilot scheme involving just 12 employers, is described by HMRC as the biggest change to the payroll system in more than 60 years.

It involves employers reporting PAYE deductions from salaries and wages and payments to HMRC at the time they are made rather than after the end of the tax year, which was previously the case.

HMRC says the change is designed to reflect the greater “fluidity” of the modern labour market and to ensure that the right amount of tax is being taken at source, so also improving accuracy for employers and employees.

However, although RTI is now being used to file 99% of all PAYE returns, 3,536 employers in East Anglia still have yet to start using the system. If they don’t send HMRC their PAYE information by May 19, they face a penalty of at least £100, with the penalty depending on the number of employees and the length of time involved.

Ruth Owen, HMRC’s director general for personal tax, said: “Over 99% of PAYE records are being successfully reported in real time and the majority of businesses say they find the new system easy to use.

“So those who have not begun using the system should not stick their heads in the sand. They need to act now to ensure that they don’t get a penalty at the year end.”