New penalties for late filing

PAYE - new penalties for late filing of returns and late payment

The new penalty rules will affect almost all taxes and the submission of relevant returns and payment of taxes. They will treat late payment and late filed returns as separate offences.

The penalties taxpayers could face for filing returns late may be much higher than previously. For example, if a tax return is 12 months late in certain circumstances the penalty could potentially be up to 100% of the tax due!

The new rules apply tax-geared penalties for the first time to employers who are late in making their monthly PAYE and NIC payments and companies paying corporation tax late, unless a “time to pay” arrangement has been agreed in advance with HMRC. For example, where an employer pays PAYE late on 2 occasions they could face a penalty of 2% of the tax paid late rising to 5% if the tax remains late after 6 months and again after 12 months.

These penalties will be phased in over a number of years but it is anticipated that some at least will apply from the date the 2009 Finance Act receives Royal Assent (usually in July). The introduction of the penalty for late payment of in year PAYE is expected to be April 2010. 

The message here is clearly file and pay on time and if you think you are going to have a problem speak to us or the Revenue well before the deadline!

May 2009