From 6 April 2010 HMRC will charge penalties on PAYE and NICs that is paid late.
Penalties will apply to late payments for:
PAYE (including PAYE Settlement Agreements and determinations).
National Insurance contributions (NICs) (including annual payments of Class 1A)
Construction Industry Scheme (CIS) deductions
Student Loan deductions
Penalties will be charged according to whether the payment is due monthly, quarterly or annually.
Larger employers: should receive an automated warning letter when a payment is late. This requires no action (although the employer will need to confirm to itself that a payment was infact late: it may need to appeal this point later). A manually generated penalty notice will be issued by HMRC for second and subsequent defaults.
Smaller employers: it will not be possible for HMRC to generate automated warnings. HMRC will send notifications of late payment penalty charges after the end of the year.
HMRC has up to two years after the late payment occurred to issue a penalty letter.
Practical considerations:
Smaller (and presumably "medium sized") employers may have find that a whole year or longer has elapsed before they are aware that a penalty has been charged.
The onus is on the employer to contact HMRC if it considers that it has cashflow problems and needs time to pay. It should do this before it defaults.
The employer should create adequate systems so that it can confirm when a payment is made, should it be necessary to appeal penalties at a later stage.
Penalties may apply if you are only a day late. As with the VAT penalty regime, penalties increase over time.
If you need help managing your payroll, CMA has a cost effective solution to help you avoid these penalties
Get in touch for more details
If you are a small employer, with fewer than 50 employees, you will need to start thinking about yearend filing for 2009/10.
This year is the first time that you must file your Employer Annual Return (P35 and accompanying P14s) online by 19 May. Employers with more than 50 employees should already be submitting their annual returns online.
Some small employers have already filed online, with HMRC offering incentive payments for early adoption of online filing. However, the incentives have now ended and HMRC will charge penalties, if annual returns are not filed online on time.
CMA Accountancy, as payroll agent, can fully process your payroll and send forms online for you.
If you would like to discuss this with someone please get in touch and we can help you avoid any penalties !