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.
