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HMRC have announced a new penalty regieme for late payment of PAYE / NI, comencing April 2010.

Current position: interest is charged on PAYE / NI paid after the 19 April after the tax year, eg for 2009-10, anything paid after 19 April, and penalties are charged if annual returns P35 / P14 / P60 are not made by 19 May. There are currently no penalties or interest charges if PAYE / NI due during the year is not paid till the April.

New position: starting from 2101-11 penalties will be charged if in year payments are not made on time. This means the practice of some employers of deffering payment of all PAYE / NI till the end of the year will incur penalties.

Trap: the new regieme starts on 5 April 2010, and the first set of penalties will be incurred if month one payments, for the period to 5 May are not paid by 19 May. But penalty notices are not being issued till the following April, April 2011 – it seems possble therefore to continue for a year on the basis of “ignorance is bliss” and have a large shock.