Proposed new penalties for late payment of PAYE
HMRC proposes a tougher penalty regime for employers who pay over PAYE
deductions after the monthly due date. Currently, large employers with more
than 250 staff are subject to a small penalty charge after more than two
late payments. This is calculated on their total PAYE remittances. HMRC
proposes instead that all employers who miss more than one monthly payment
due date would be subject to what looks like a much more significant penalty
on late-paid PAYE. It would be geared initially to the number of defaults,
but become tax-geared where payment is more than 6 months late. Employers
would notify total payments for each month in their end of year returns.
These penalties would be in addition to interest on PAYE not paid over by
the due date on the 19th of the month.
Our view
Although HMRC is consulting at this stage it is clearly aiming at
introducing legislation to this effect in the 2009 Finance Bill. This may affect
not just cash-strapped employers who deliberately defer payment, but employers
who fail to pick up in sufficient time remuneration paid on their behalf by
third parties, including on an overseas payroll.
