New PAYE fines being enforced

runninglea

Has anyone else had a letter stating that due to consistently late payment of PAYE then they are getting a penaly of 4% of the total amount due for the year.

I know that it should be paid by 19th of the month but for the last 30-40 years has been paid between 22nd to 30th without exception.

Due to customers pay dates etc it is difficult to catch up this 10 days.

The HMRC have issued a penalty notice saying they want many thousands in penalties.

I know we can appeal but just wondering if anyone else has had this penalty and what they are doing about it.

Thanks

WestonDave

Unfortunately its precisely because people were taking liberties with the payment date that these penalties were introduced 15 months ago - with plenty of warnings I might add. You can try to appeal but in almost all cases unless the Revenue have made an error (which you appear to admit they haven't) there is little discretion for people pleading poverty etc. Trying to justify it on grounds of a long history of breaking the rules is probably not a smart move, nor unfortunately is your customer payment timings their problem. Their website lists some things which might mean a penalty is withdrawn but they are all exceptional one off things like a death or fire etc. It specifically says that lack of funds is not an valid reason.

What you absolutely have to do is make sure everything is paid on time from now on. Sorry to alarm you but HMRC have 2 years to impose these penalties so this may already be historic with your continued late payment over the new regime period potentially have already stored you up another bigger penalty which you have yet to be notified of! If you get back on track they may not impose it, but I would certainly make sure that payment is in their account when its due. The only thing worth checking is whether there is any additional leeway for electronic payment. I know VAT is due on the last day of the following month if paid by cheque but 7 days later if paid electronically. If you pay by BACS it leaves your account on that day (although you have to instruct it at least 3 days before) so it would potentially buy some time if its permissable with PAYE. (Just checked - you have until the 22nd if paid electronically so that might help you a bit with cashflow)

runninglea

Thanks - I understand that people do pay consistently late (us included) but it does get paid.

Reading their guidelines you can pay 1 day late or 6 months late and still get the same penalty.

Our PAYE is again due which is 40-45K, instead of being late then we have been advised to make a payment which may not be the full amount.

This will register as having been paid on time and thus not triggering a penalty.

I do understand that yes we are late but they are charging at what appears to be about 180% penalty for the short period of time.

WestonDave

I'm sure being in business that you will appreciate that once people that owe you money start to let payments drag it can become a slippery slope towards bad debts. To be fair you are only getting a 4% penalty because of the number of times you have been late over a 12 month period - its not a late once get hit with 4% system. If you are only late once for example you just get a warning.

One other thing which is worth bearing in mind - lenders are increasingly requiring businesses seeking finance to confirm that all payments due to HMRC in respect of taxes and VAT have been made on time and in full. Its a fairly good shorthand for knowing if a business is heading for trouble. So if you were to continue your old system, even without the penalties, it could still pose problems for your business.

(Assuming you pay interest on your overdraft at 4% (most likely higher) and have been paying £40k a month in PAYE 10 days late for 30 years, you've probably saved nearly £16k in interest, or cost the Government that much in lost interest. In effect they are just getting back what you've gained over the years!)

Dem_2

Looks like your company is in the same situation as ours runninglea, as we received a letter last Friday with a demand for late payment charges.

Like you we have always paid the PAYE before the end of the month due, the latest was the 29th on a couple of occasions, but usually sooner, though not bang on time primarily down to the timing of the cash flow. (As a company we don’t even consider a payment late until it is 10 days overdue, and yet HMRC are issuing penalty charges for just one day overdue, which seems excessive!)

We are obviously going to appeal against this, though from reading comments on this and other forums I’m not holding out any hope of being successful as they seem to have all the angles covered.

Our main argument is that we received no correspondence from HMRC during the entire 2010/11 tax year warning us that we were in danger of accruing these excessive charges, something I believe they should have done after a couple of months. From what I’ve read tribunals don’t take too kindly to HMRC imposing higher penalties that necessary on companies when an earlier warning could have allowed the company to correct the error and thus incur a much lower charge!

BoGoF

So, pray tell, what is the reason you deduct tax/NI from your employees and don't pass it on to the rightful owners, i.e. HMRC. It's tantamount to theft and I'm sure your employees wouldn't be impressed that you use their tax/NIC to bankroll your lifestyle.

Gas_Powered_Toothbrush

Dumdum wrote: »

(As a company we don’t even consider a payment late until it is 10 days overdue, and yet HMRC are issuing penalty charges for just one day overdue, which seems excessive!)

Great idea! I am now declaring that I don't consider a payment late until it is 365 days overdue. I hereby expect HMRC to adhere to this convention when I come to pay my self-assessment bill.

John_Pierpoint

I worked for a multinational over 30 years ago, when the right to charge interest on late payments was introduced.
We changed the terms of payment to 20 days end of month (ie to give the customers 10 days lee way before we would have considered them overdue).
You could not believe the howls of anguish this caused (and the stand up fight with that horrible company GEC UK.)

The interesting thing was that the same invoicing system was used throughout the Common Market but the terms varied by nation.
Guess which nation fell over themselves to pay the invoices?
Yes it was the Germans, perhaps that is just one of the reasons why their economy is a success and ours is a failure.

ceeforcat

Is there an argument for saying that HMRC give 14 days grace already? - payment for month 6th August to 5th September payable by 19th September. Just imagine if payment was demanded when salaries paid.

chrismac1

In the overall scheme of things your "crime" is small beer. I have several clients who are much later payers than this and they have not been fined. In addition, a good friend does consultancy work for a business which has deliberately not yet submitted their 2010-11 end of year return becaus this would suddenly show to HMRC that they owe an additional £50k or so in PAYE and NI. They have a payment plan for £30k of VAT so were able to honestly answer no to the question "Do you have any other ongoing payment issues with HMRC on other taxes?"

So in my humble view its these sorts of businesses HMRC should be getting aggressive with and not yours. You may well find that a Tribunal agrees with you, should you get there.

runninglea

you can also pay 50% on time each month then in march before year end pay the remainder. It will show up as having made payments on time every month and therefore no late penalties.

Today I know that the revenue has been ringing up chasing amounts due by 22 august. They are chasing companies that will pay but they let people who get months behind of scott free to dissolve their business and start up again.