9:00am Thursday 29th July 2010
ARE you incurring penalties as you read this?
From April 6 this year, employers were required to make regular payments of their PAYE and National Insurance liabilities or face new penalty charges for each late payment during the tax year.
Previously, the payment deadlines were not stringently enforced by Revenue and Customs, and it would generally only charge interest if amounts remained outstanding after the end of the tax year.
The penalties are now charged on each late payment of PAYE, employee and employer National Insurance, student loan deductions, class 1A and class 1b NIC.
The penalties are charged as a percentage of the amount which is outstanding each time a payment is late. The penalties start at one per cent and can increase to four per cent depending on how frequently the tax is paid late.
Revenue and Customs can also charge an additional penalty of five per cent to employers that fail to settle an outstanding payment within six months of the payment due date; and this is repeated if the liability has not been settled after 12 months.
In this first year, Revenue and Customs will only notify penalties at the end of the tax year, after April 5, 2011. In future years, the penalties will be levied as and when they are due.
If no tax or NICs are due for a period, you should notify Revenue and Customs of this prior to your normal payment deadline.
If you are late in doing so, as penalties are a percentage of amounts owing, there will not be any penalty due; however this instance may be considered as “late payment” by Revenue and Customs when it decides which percentage to apply if any subsequent payments due are late.
Avoiding Penalties Pay on time – if you are paying PAYE and NIC liabilities by post, the deadline is always the 19th following the end of the tax month. If you are paying electronically, the deadline is extended to the 22nd.
Don’t forget that the payment needs to be with Revenue and Customs by the deadline.
If your total monthly liability is no higher than £1,500 a month, you may qualify to make quarterly payments.
If your business finds itself unable to pay any of its payments prior to their due date, you should call the Business Payment Support Service on 08453 021435 before the amount is due.
Appealing Penalty Charges If your business incurs penalty charges, there is an appeals process available.
If you feel that you have “reasonable” excuse, you should provide as much information as possible to support your appeal.
You need to demonstrate that your business has made every effort to make payment by the deadline and/or that your inability to pay on time was out of your control – LB Group would be pleased to assist you with any appeal.
LB Group is a firm of chartered accountants, business advisers and chartered tax advisers with offices in Colchester, Chelmsford, Ipswich and London. For a no obligation consultation, e-mail richard.francis@lbgroupltd.
com or call 01206 867551.
This article is designed for the information of the reader and while every effort is made to ensure accuracy, information contained in this article may not be comprehensive and recipients should not act upon it without seeking professional advice.
• LB Group is registered to carry out audit work by the Institute of Chartered Accountants in England and Wales.
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