There are two changes that are being introduced by HMRC in April 2010 that you need to be aware of.
HMRC will no longer accept the PAYE year end forms (P35 and P14) in paper format. Hence, all 2009/10 PAYE year end forms must be submitted to HMRC electronically when they are filed in April/May 2010.
For most businesses this is unlikely to be a problem, as many will already have submitted their PAYE year end returns to HMRC via the internet in previous tax years (so as to obtain the incentive payments that the government has offered).
However, there will be some smaller businesses that still operate manual accounting and payroll records (and may even not have any need for a computer) and these businesses will have to think about how they can submit their 2009/10 PAYE year end returns electronically to HMRC. One solution is that we can do it on their behalf very easily – we do not even have to set up any authorisation codes with HMRC, so it can also be done very quickly.
All businesses need to be aware of the new penalty regime that will apply to any late payment of PAYE/NIC, particularly in the current economic climate where businesses occasionally pay their PAYE/NIC late, as a means of dealing with short term cash flow issues.
There are two types of penalty.
The first type applies to payments that are “very late”, which means more than 6 months after when the payment was due. In this situation the penalty is 5% (of the total amount that is paid late), which increases by a further 5% if the payment is more than 12 months late.
PAYE/NIC is normally due for payment to HMRC by the 19th day in the month following that in which the wages have been paid to staff. Smaller businesses can pay their PAYE/NIC to HMRC on a quarterly basis (rather than monthly) and to do this, their PAYE/NIC payments must be less than £1,500 per month on average (i.e. less than £4,500 per quarter).
The second type of penalty applies where there has been more than one late payment of PAYE/NIC in the tax year, with the penalty increasing as the number of late payments increase. If the there have been 2, 3 or 4 late payments then a 1% penalty will apply; 5, 6 or 7 late payments will give rise to a 2% penalty; 8, 9 or 10 late payments will produce a 3% penalty and if there are 11 or more late payments in a tax year then a 4% penalty will apply.
Please note that HMRC have extended their “time to pay” arrangements and we would strongly recommend that any businesses that foresee that they will be late with their PAYE/NIC payments in 2010/11 should either contact HMRC directly (on 0845 3021435) or ourselves and agree a payment plan with HMRC, which will avoid the above penalties being applied.
If you require any help or assistance, please do not hesitate to contact our payroll teams on 01768 864466 (Helen Tyson or Claire Braithwaite); or 01228 530913 (Hilda Whittle, Tania Johnston or Katie Powley).
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