Now on HMRC will be charging late payment penalties from all employers and contractors – whether you employ one or several hundred employees or subcontractors. The penalty applies to monthly, quarterly and annual periods of PAYE starting on or after 6 April 2010 and not paid in full on time, including:
· monthly, quarterly or annual PAYE (Pay As You Earn)
· student loan deductions
· Construction Industry Scheme (CIS) deductions
· Class 1 National Insurance contributions (NICs)
· annual payments of employers’ Class 1A and Class 1B NICs
HMRC may send you a warning letter if you do not pay on time. They may do this the first time in the tax year they think your PAYE payment is late. The letter is issued about two weeks after the payment date. If a penalty is due, HMRC will send you a late payment penalty letter telling you how much you owe and when you have to pay it by. It will also tell you what to do if you think the penalty is wrong, including how to appeal. For penalties relating to late payments that occurred in the 2010-11 tax year, HMRC will send notifications of late payment penalty charges after the end of the year.
Penalty
The actual penalty amount would range from 1% of the payment due (for payments made late 2-4 times in a tax year) going up to 4%. If you have still not paid a monthly or quarterly amount in full, after six months you may have to pay an additional penalty of 5 per cent. A further penalty of 5 per cent may be charged if you have not paid after 12 months. You may also be charged a late payment penalty if you pay less than is actually due. This applies even where you pay roughly the right amount each month and then make an end of year adjustment. You should therefore make sure you pay in full each month, rather than estimate the amounts you need to pay.
