Late payment penalties for PAYE / NIC

By Tolley in association with Philip Rutherford
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The following Owner-Managed Businesses guidance note by Tolley in association with Philip Rutherford provides comprehensive and up to date tax information covering:

  • Late payment penalties for PAYE / NIC
  • Introduction
  • Operation of the penalty
  • Notification of the quantum of the penalty
  • Reasonable excuse
  • Penalties for late payment of Class 1A and Class 1B NIC

Introduction

The late payment of income tax and National Insurance contributions (NIC) via PAYE, student loan deductions and income tax due under the construction industry scheme (CIS) will attract both interest and penalties.

The rules outlined below came into force for any tax month or tax quarter beginning on or after 6 April 2010. Prior to that date, there were no penalties for late PAYE payments for the majority of employers as long as the amount due for the tax year was paid by 19 April (22 April if the payment was made electronically) after the end of the tax year. Finance Act 2013, Sch 50 amended the PAYE penalties regime to cater for the introduction of real time information (RTI) but penalties for late payment under RTI were phased in (see the announcement  on the GOV.UK website).

The late payment penalties apply to all employers and contractors regardless of size. The regime covers all payments made throughout the year, whether on a monthly or quarterly basis, and includes all payments in respect of:

  • income tax payments via PAYE
  • student loan deductions
  • payments under the CIS, and
  • Class 1 NIC via PAYE

FA 2009, Sch 56, para 5

Since October 2013, most employers are now required to file PAYE returns in real time. The RTI requirements govern how and when filings have to be made. For further information on RTI, please refer to the Real time information guidance note in the Employment taxes module (subscription sensitive). While RTI governs the nature of the submission to HMRC, it has not changed the due dates for filings, and paying tax and NIC to HMRC. There are separate penalties for failure to comply with the RTI requirements. Historically, HMRC had difficulty

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