Mon, 14 Nov 2011

Increasing number of employers being stung by in-year penalties

An increasing number of employers are being hit by in-year penalties for late payment of PAYE and National Insurance Contributions (NICs) since new rules were introduced by HM Revenue & Customs (HMRC) last year.

Since April 2010, employers have received in-year penalties for late payment of PAYE or NICs. In the first year HMRC charged penalties after the end of the tax year but is now issuing warning letters during the year where monthly or quarterly payments are late or full amounts have not been paid.

Penalties can also be charged when too little tax is deducted under PAYE, as this is considered a failure to make a full payment to the Revenue. The level of penalty is determined by the number of months in a tax year in which a payment is made late and the extent of the delay.

Alastair Kendrick, tax director at accountants MacIntyre Hudson, said: “We are finding that a lot of employers have been caught out by this change and we are seeing a number of employers who have paid tax/NIC a day or so late each month and now face considerable penalty charges.

“We are also finding that there is a growing number of employers who are appealing against these penalty charges and are looking to take their appeals to the Lower Tribunal.

“The result of this is it is clear that employers need to be mindful of these new rules and ensure they have robust systems in place to ensure payment of PAYE/NIC is made when due.”

See also:

• HMRC’s implementation of new computer system falls short ahead of RTI
• Smartphones now considered mobile phones by HMRC but further clarity needed
• HMRC may end up in the dock following whistleblower’s allegations over tax deals