Late payment penalties—PAYE, NICs and construction industry scheme
Produced in partnership with Philip Rutherford
Late payment penalties—PAYE, NICs and construction industry scheme

The following Tax practice note Produced in partnership with Philip Rutherford provides comprehensive and up to date legal information covering:

  • Late payment penalties—PAYE, NICs and construction industry scheme
  • Commencement and the impact of real time information
  • Operation of the penalty for monthly and quarterly payments
  • Calculating the penalty—rules from April 2015
  • Example 1—illustrating the multiple penalties where monthly payments are made late from April 2015
  • Calculating the penalty—rules until April 2015
  • Example 2—illustrating the multiple penalties where monthly payments are made late prior to April 2015
  • Notification of the penalty
  • Penalties for late payment of Class 1A and Class 1B NICs

FORTHCOMING CHANGE: HMRC has consulted on the introduction of a new model that will replace the current late payment penalties with a hybrid regime of penalties and penalty interest. Half the penalty, which will be an as yet unspecified percentage of the unpaid tax, will arise when a payment is late by 15 days; the second half of the penalty will arise when a payment is late by 30 days; followed by penalty interest from 30 days (at a rate not yet set) (in addition to late payment interest). Suspension of penalties will be available where there are suitable time to pay arrangements put in place with HMRC. These changes were intended to be in Finance Bill 2019 (see News Analysis: Legislation day: Draft Finance Bill 2019—Tax administration) but at Budget 2018 the government announced that they would be deferred to a future Finance Bill.

This Practice Note is about the penalty regime in the Finance Act 2009 (FA 2009) for the late payment of:

  1. income tax and Class 1 NICs via pay as you earn (PAYE)

  2. student loan deductions

  3. income tax due under the construction industry scheme (CIS), and

  4. Class 1A and Class 1B NICs

Late paid tax will also incur interest, see Practice Note: Interest on late paid tax.

The calculation of late payment penalties depends on whether the tax is payable:

  1. monthly or quarterly

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