Written by Alison Clynes
Published on July 18, 2010

From April 6th 2010 stricter regulations apply regarding payments from businesses to HM Revenue and Customs, with financial penalties for lateness. This applies to all employers and contractors, and covers monthly, quarterly and annual payments for regular PAYE, student loan deductions, class 1 National Insurance contributions (NICs), employers' class 1A NICs, the construction industry scheme (CIS), annual PAYE settlement agreements (PSA), and PAYE determinations or charges.

The complex regulations are challenging for staff tasked with payroll processing services. Penalties apply to each individual PAYE scheme an employer operates, so meticulous administration is essential.

For monthly or quarterly payments, employers will avoid fines if only one PAYE amount per tax year is late (unless 6 months or more overdue). Penalties are calculated according to the number of late payments and the amount owing. Two to four late payments per year incur a penalty of 1%, rising incrementally to 4% for eleven or more. If the sum owed is not fully paid after six months, a 5% penalty is incurred, with an additional 5% after twelve months.

For annual payments, a 5% fine is liable if payment is not received by the 'penalty date' (usually 30 days after the due date). Payments after this mean a 5% penalty if 5 months late, and an additional 5% if still unpaid after eleven months.

HMRC will correspond fully with employers when penalty charges become liable.

Administering these complexities is time consuming and costly. Many businesses now prefer to use payroll outsourcing services from a company such as ourselves at Dataplan Payroll, because our highly trained specialists get things right, and paid on time.