Written by Paul Chappell
Published on January 12, 2018

Sorry for such a negative blog so early in the New Year!

Businesses can make a payment late to HMRC for a number of reasons, short term cash flow, staff holidays, the employer forgets. However what are the consequences of making a late payment or not paying at all?

First the good news! The first ‘failure’ to pay on time doesn’t count as a default. However for continued failures, HMRC will charge a penalty. The amount of the penalty is a percentage of the PAYE and NIC due. The percentage applied is as follows:

Number of defaults in the year                              Penalty Percentage

1-3                                                                                         1%

4-6                                                                                         2%

7-9                                                                                         3%

10 or more                                                                           4%

In addition to the penalty, HMRC will also charge daily interest.

An additional penalty of 5% is charged if payment remains outstanding for 6 months. If payment hasn’t been paid after 12 months, a further 5% penalty is charged.

Now for some positive news. It is possible to avoid these penalties. But how I hear you cry?

Communication with HMRC. HMRC have a special unit called the Business Payment Support Services, with a dedicated telephone line. If contact is made with HMRC before the due date of the amount due, and agreement is reached with HMRC on a payment plan, the penalty will not be charged.

Of course if HMRC issue a penalty notice that is incorrect, there is an appeal process available.

For further details or information please contact Paul Chappell.