Late PAYE payments and debt

Published: 6 August 2014
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Author: Paul Simmons

The timing of payments to HMRC needs to be 100% accurate as one day out means the payment is  ‘late’, and multiple late payments = penalties.

In a recent case, a small company found this out the hard way as they ended up with penalties of nearly £20,000 for paying their PAYE late on seven occasions in 2011/12.  HMRC accepted that one of those late payments was due to a customer paying late and accepted that as a reasonable excuse, and another was due to a time to pay agreement being ignored, so was also a reasonable excuse.

However, it would not accept that a huge strain was placed on the business by HMRC paying VAT refunds later than expected. The company reclaimed VAT each month and normally the repayment came through on the day of the claim which was the 7th or 8th or the month. But in August 2011 the VAT claim was made on 8 August and repayment arrived on 30 August. This meant that the PAYE due on 22 August could not be paid until 30 August. The VAT repayment for January 2012 took 30 days to arrive.

The late payment in August counted as the first default as the PAYE due in May had been late by a day. An employer is allowed one late payment in the year, but no more.

At least two of the payments the company made in the year were deemed to be late as they arrived on Monday 23rd when the due date was Sunday 22nd. The company should have set up the electronic payment to go out on Friday 20th to avoid it being late.

Remember to make your PAYE payments in on time. Cheques received on Saturday 19th July will be late as they will not be recorded until Monday 21st.

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