At the start of the new financial year, new penalties were introduced for the late payment of PAYE tax. This is relevant for contractors who work through an umbrella company. The penalties are to contractors and employers who do not pay their PAYE bill monthly, quarterly or annually as agreed.

The new penalty regime applies to incomplete and/or late payment of tax, NICs, student loan deductions and the construction industry scheme. It has replaced the Mandatory Electronic Payment (MEP) scheme.

Experts at the MHH Partnership informed Contractor UK that the new penalty regime will cover all contractors and employers, irrespective of whether they file online. Penalties of between 1 and 4% will be charged for monthly and quarterly payment which are up to six months late. Monthly and quarterly payments made more than six months late are subject to penalties of 5% with and extra 5% charged if the payments are not made within 12 months.

With regards to annual payments, they will receive penalties of 5% which can be applied up to three times within the year. A further 5% can be charged if these payments are not received within 12 months.

Announcing the new regime, HMRC said: “In most cases if you disagree with HMRC decision’s, including the decision to charge a penalty, you can appeal. From April, HMRC has also offered the option of an internal review of tax decisions that can be appealed, with the aim of resolving issues as quickly as possible.”

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