Change in the rules = big fines
HMRC rule changes mean that employers need to make PAYE payments promptly or face large penalties.
It used to be that although you were supposed to pay PAYE and NI contributions to HMRC by the 19th of the following month in practice you could get away with paying late as long as everything was sorted out by the end of the tax year.
In 2010 HMRC changed the rules but it is quite possible that you weren’t aware of the change or didn’t fall foul of it in the last tax year.
Late Payment Schedule
In brief if you make more than one late payment (i.e. after the 19th of the following month) in the tax year you’ll start to incur a fine based on the total amount of late payment, in ascending bands. For instance if you pay late 2 to 4 times in the tax year then the fine is 1% of the total amount that is late. If you pay late 11 to 12 times in the tax year then the fine is 4% of the late payment amount.
From HMRC’s perspective a payment made even one day late will incur a penalty, which means that you need to allow time for funds to clear even if you pay online. More controversially penalty notices will not be sent out until after the end of the tax year, even though the HMRC systems could flag up problems much faster.
It’s a good time to check your own payment records to see whether payments have been made on time. If you don’t already keep a clear payment schedule then set one up in your accounting package or use Outlook or even a calendar. If you have had specific problems making payments such as a bank issue or a broadband outage then make sure these are noted and try and provide some evidence.
Finally if you have cash flow problems then flag these up to HMRC immediately; don’t wait for a penalty notice. HMRC is being flexible for companies that highlight problems but may not take this as an excuse if you wait too long before notifying them.
If you need any help sorting late payment problems out or you want our expertise in setting your systems up so you don’t have a problem in the first place then contact Andrew Smith or Craig Beale at Lewis Smith & Co. today. Call 01384 235549 or email firstname.lastname@example.org.
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