The taxman sometimes seems to believe that the main reason for running a business is to fill in official forms. He wonders how you can be late submitting something to him, when that’s the most important task there is!
The penalties for lateness apply separately to late forms and late payments. This can end up very expensive, particularly for PAYE which must be paid monthly or quarterly.
The PAYE forms (P35 & P14) have to be submitted once per tax year, by 19 May after the tax year end. You are fined £100 for each month the form is late (more for large payrolls). Under real time information (RTI), you will have to make RTI reports online every time your employees are paid. However, for the first year of RTI – 2013/14 – penalties for late reports won’t be imposed if all the information for the tax year is reported by 19 May 2014.
Penalties for late paid PAYE can build up through the tax year. The penalty is based on the number of times the PAYE due arrived late in the tax year: 1% for up to three late payments, and 4% for 10 or more late payments. You are allowed one late payment in a year with no penalty. It is possible to get out of the penalty if you have a ‘reasonable excuse’. But it’s better to identify the possible problems and do something about them.
If you have received a warning letter from the taxman that PAYE is overdue, don’t ignore it. We can help you change your systems to ensure PAYE payments arrive on time. Talk to us before PAYE late payment penalties build up.