News
May 2010
PAYE/CIS Deductions – Late Payment Penalties
With effect from April 2010, penalties for late payment of PAYE/CIS deductions will be imposed, which can take effect from the first payment due for the tax year in May 2010.
These penalties will be imposed on any payment which is due under PAYE or CIS, which is paid even one day late.
The amount of the penalty will start at 1%, rising to 4%, depending on the number of late payments in the year. There are also penalties of 5% if any of the PAYE/CIS deductions which are due are still not paid after six months, and again after twelve months.
These new penalties are in themselves reasonably clear, but the problem lies in the fact that an employer or subcontractor will not be notified that they have triggered a penalty until they are told by HM Revenue & Customs in April or May 2011. This means that penalties of up to 4% and in some cases 5% can be inadvertently triggered without any warning. This is a particular problem where payment is not yet made on-line or by BACS, so that there is no certainty as to when the payment is received by HMRC.
HM Revenue & Customs is advising that employers and subcontractors should tell them as soon as possible if they will not be able to pay these liabilities on time. However, it is not clear whether this will absolve them from the penalty.
