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News - 8 March 2010

BEWARE - HMRC will charge interest from 2010-11 on late paid PAYE

PAYE Payments – New HMRC Rules Regarding Penalties For 2010 - 11

From tax year 2010-11 HMRC may charge penalties if PAYE is paid late.  This includes:

1. Tax,
2. National Insurance contributions,
3. Construction Industry Scheme deductions,
4. Student loan deductions.

This means you may have to pay a penalty if you do not make PAYE payments on time and in full from May 2010.  The new late payment penalties will apply to all employers.

How the New Penalties Will Work:

The penalties will be a percentage of the amount paid late and start at 1% and increase to 4%, depending on the number of late payments in the year.  There are also penalties of 5% if any of the PAYE due is still not paid after 6 months and again after 12 months.

HMRC has stated you will not receive a penalty if you have a reasonable excuse for being late, or if you are only late once in a tax year (unless that payment is more than 6 months overdue).  You can also appeal against the penalty, if you disagree with HMRC’s decision to impose it, or if you believe that the penalty amount is wrong.

A ‘reasonable excuse’ will differ depending on the particular circumstances of the employer.  HMRC guidance states, it is likely to be somethingu unusual, for example:

1. That you could not reasonably known would happen; and which,
2. You could not do anything to prevent.

Some things will not count as a reasonable excuse:
a) Inability to pay (unless this inability to pay is attributable to events outside your control),
b) You have deliberately not paid; or you rely on someone else to make the payment for you (unless you took reasonable care to make sure the payment was made).

HMRC will send out the new penalties for tax year 2010 – 11 from April 2011.

Payment Deadlines :

The PAYE payment deadlines are:

- 22nd of the month for cleared electronic payments to reach HMRC's account,
- 19th of the month if payment is sent by post.

If these dates fall on a weekend or bank holiday, the payment needs to reach HMRC on the last bank working day before the 19th or 22nd.

If the amounts paid are likely to average less than £1,500 per month, you can also pay quarterly.

Electronic Payment

You can pay electronically to HMRC using the following methods:

1. Direct Debit,
2. BACS,
3. Internet or telephone banking,
4. Debit or credit card via the internet,
5. CHAPS,
6. Bank Giro,
7. Payment at the Post Office,

Larger employers are required to make payments electronically.

If You Can’t Pay What is Owed:

It is important that you contact HMRC as soon as possible if you think you can’t pay. This is done by contacting HMRC’s Business Payment Support Service on 0845 302 1435. If HMRC agree a payment arrangement with you, you will not be charged any penalties for the period of the agreement, but you may have to pay penalties for earlier late payments.

If You Don’t Have Anything to Pay

If you don’t have anything to pay for a month or quarter, you should let HMRC know. This can be done in the following ways:

1. Completing an online HMRC form at www.hmrc.gov.uk/payinghmrc/paye-nil.htm 
2. If you receive a payslip booklet, send HMRC a signed payslip for the month or quarter marked 'NIL due',
3. Phone HMRC on 0845 366 7816, providing your Accounts Office reference number and the details of the month or quarter for which no payment is due.

If you would like to find out more about the new PAYE penalties or making PAYE payments in general, please contact us and we will be glad to assist you.

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