Do you need to update your PAYE payment procedures?
Many businesses may have paid their PAYE late for cash flow reasons but the government has now introduced new PAYE penalties.
You may now have to pay a penalty if you pay your PAYE, NICS or CIS payments late.
The penalty rules applied from 18 May 2010.
All employers are subject to the new penalties, including people employing domestic staff, nannies or care workers in their own home.
The good news is that no penalty is due on the first late payment and the Revenue should then issue a warning letter.
The penalty for the second and subsequent late payments increases from 1% to 4% of the amount due in the same tax year.
Additional penalties of 5% are due:
- for payments six months late
- for payments 12 months late
Getting behind with PAYE can be very expensive.
You can appeal against a penalty if you have a ‘reasonable excuse’ for not making the payment on time. The Revenue is unlikely to accept lack of funds as a reasonable excuse unless you can prove that this was due to something beyond your normal control such as an exceptional bad debt.