PAYE/NIC/CIS Penalties

New legislation has recently come into force stating that for the 2010/11 tax year and beyond, any late payments of PAYE, NICs and CIS will incur a penalty.

This is the first time that HM Revenue and Customs (HMRC) has held this kind of power, and it is important to be aware of the new rules as the penalties apply to all employers and contractors.

For the first late payment, there will be no penalty, but a charge will be triggered once a second payment becomes overdue within a year. The charge will be 1% of the total overdue amount for 2 to 4 late payments, 2% for 5 to 7, 3% for 8 to 10 and 4% for 11 to 12 late payments within a year. An additional penalty of 5% will be incurred should the late payment remain outstanding for more than 6 months and a further 5% penalty after 12 months.

A penalty may not be charged if there is an exceptional excuse for the payment being late but generally it is your responsibility to ensure you pay on time as HMRC doesn’t issue reminder letters.

It is also important to note that as of this year, all PAYE returns must be submitted online and not by post - although payment may still be made by post.

For more detailed advice on PAYE, NICs and CIS payments and penalties, please contact us directly by telephone or email. You may also find additional comprehensive information at http://www.hmrc.gov.uk/paye/problems-inspections/late-payments.htm.