Employers could face steep fines if they file late tax payments for staff under new HM Revenue & Customs (HMRC) rules.
The penalty regime imposed by HMRC, which started on April 6, applies to the late payment of PAYE/NIC on employees’ wages.
Richard Mathews, director at Swindon-based Banks Chartered Accountants, said: “The penalties are based on the number of defaults and/or late payments which take place in relation to the tax year and increase in magnitude with the number of defaults that occur.
“They are now only just being raised by HMRC for the 2010/11 tax year as they now have details of when all the monthly payments were paid to determine the rate of penalty charged.”
The scale of penalties is: one default in the year, no penalty; two, three or four defaults in the year, one per cent of the total of the defaults, including the first; five, six or seven defaults in the year, two per cent of the total of the defaults; eight, nine or ten defaults in the year, three per cent of the total of the defaults; finally, if there are 11 or more defaults in the year the penalty is four per cent of the total of the defaults.
Richard added: “As can be seen from the scale, the penalty can be a fairly substantial amount if the monthly PAYE/NIC payments were also of a fairly sizeable amount. Furthermore, should the amounts remain outstanding for more than six months after the penalty date a further penalty equivalent to five per cent of the unpaid amount is charged with a further five per cent charge being raised 12 months after the penalty date.”
Employers using electronic payments must ensure their cleared payment is with HMRC no later than the 22nd of the month following the end of the month or quarter to which it relates. If paying by post, a cheque must arrive with HMRC no later than the 19th of the month following the end of the month or quarter to which it relates.
Richard added: “While an appeal can be made against these penalties, HMRC are adopting a tough stance and it is advisable to ensure future PAYE/NIC payments are with HMRC on time.”
