What happens when payments are made late to HMRC?

What happens when payments are made late to HMRC?
Paul Chappell
Written by Paul Chappell
Friday, 12 January 2018 14:41

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.

Paul Chappell

Paul joined Dataplan from HM Revenue and Customs in 2007 and runs our PAYE compliance and investigation services.

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