Will you catch a cold with HMRC penalties?

24th May 2011

Several weeks ago on Radio 4’s Money Box program there was a report on the heavy handed tactics of HMRC who had made final demands for immediate payment of tax liabilities for what seems like very small sums of money.
The Governments austerity measures are hitting hard and HMRC is taking a hard line with regard to late payments.  In May 2010, in an attempt to encourage companies to pay the correct PAYE and related liabilities on time, they introduced a penalty charge calculated as a proportion of the amount that is paid late – the percentage of which gets bigger depending on how often payments are late.
One of the subtleties of the system companies may have failed to pick up on is that the penalty would be applied on a risk assessed basis for 2010/2011, not throughout the year. So if you have not had a penalty yet, it does not mean you won’t get one!  For example paying a small amount for the first 11 months followed by a large amount in the last month to top up the years payments would be considered an abuse of the system but HMRC would have to inspect the records to discover the exact amounts. These discrepancies may only be identified several years later and the total penalty (which could be very substantial) demanded in one lump sum.

April 2011 also sees the introduction of online filing for P45’s & P46’s (Leavers and Joiners) in addition to the  end of year returns (P14’s and P35’s). Penalties from £100 to £3000 have been introduced for non-filing.

Late penalties remain at £100 per 50 employees per month.  From 2012 the £100 initial penalty will be followed by a daily penalty if filed more than 3 months late.

PAYE and NIC inaccuracies also come under the standardised penalty regime for inaccuracies.

Don’t expose your business to fines and scrutiny from HMRC due to poor financial management and record keeping.

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