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PAYE Late Payment Penalties

PAYE Late Payment Penalties

A client has just e mailed me a copy of the penalty notice letter he has received relating to late payment of monthly PAYE and NIC in 2010/11.

The total penalty sought is a large five figure sum, covering 11 of the 12 months at a flat 4% of the month's liability. There is no penalty for month 1. The latest after the due date date that payment was made was 23 days; some months were as close as 2 days, but typically the delay was 5 to 7 days. The whole of the liability for the year was settled in full by April 27.

Has anyone had any experience yet of successfully appealing against such a penalty?


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20th Jun 2011 16:13

PAYe penalties

Nothing regarding an appeal but we have had a similar penalty charged. I think most people were perhaps expecting that the 4% would be applied to anything outstanding at 19 April rather than applied to each over due payment, and it is  applied in full to each monthly overdue amount, so there is the same penalty for settling the year's liability in April as there is for paying one day late each month.

The penalties are certainly much greater than anyone envisaged I think.

Other than reasonable excuse I'm not sure what grounds for appeal there could be.


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20th Jun 2011 16:37

You cannot be serious!

For a 4% penalty to amount to even the smallest five figure sum (£10,000), the total PAYE payments for the 11 months must have amounted to £250,000.  The client would have received at least one late payment warning letter.  Indeed, I would be surprised if the Revenue didn't call him every month to chase up his payment as they knew him to be a persistent late payer and the amounts involved were worth chasing.

The penalty only reaches 4% for 11 late payments in a year.  If they have only charged him on 11 months, he must have paid one month on time.  If he had manged to pay just one more month on time, the penalty would have been 3%.

On what grounds could you possibly appeal?

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20th Jun 2011 16:49

Very Serious!

Financial Controller thinks that his job is on the line.

He paid the latest ones by return on receipt of a warning notice that if he didn't pay within 7 days he would be fined! No calls or contact from HMRC beyond this unfortunately.



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20th Jun 2011 17:12

Always late

The first late payment in each tax year is disregarded, so to get a penalty based on 11 late months, the payment was actually late in every single month of the year.

If the financial controller's job is on the line, then I have to say I'm not surprised - surely it should be part of that role to avoid exposing the company to significant penalties by habitually paying late. After all, the deadlines themselves are hardly new even if the penalty regime is!


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20th Jun 2011 17:54


I don't agree that he paid late in all 12 months.  It is my understanding that although one late payment a year is not penalised, it is not ignored if there are two or more late payments.  So, if you pay late twice, you will be charged a penalty of 1% on both late amounts.

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20th Jun 2011 21:12


It looks to me as if the penalty is a percentage of the tax due in respect of "those defaults" which seems to mean all the defaults that count (so excluding the first amount due for payment which is not paid on time).


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21st Jun 2011 10:38

@David & @Neil

You are right and I am wrong!

The HMRC webpage to which I gave the link clearly states under "Amount to which penalty percentages apply"

"Total amount that is late in the tax year (ignoring the first late payment in that tax year)"

So, for the penalty to have been applied to 11 late payments, it must have been 12 (-1) late payments.  Presumably, if there had been 11 late payments, 4% would have been applied to 11-1=10 amounts.

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21st Jun 2011 12:06

One more

Let's hope he remembers that there is one more payment for 2010/11 due next month (for Class 1A NIC).  I presume if that is late it counts as another default for the year for penalty purposes!


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18th Jul 2011 16:12

PAYE Penalties


We have a client in a similar position and initial appeal to HMRC has been knocked back, solely considering the issue of reasonable excuse and without any real consideration of issue of proportionality - not a surprise.  

I would be interested to know how common these have been over the last month and whether anyone has had any success with HMRC.

Interestingly, in our case, HMRC appear to take the view that they were not able to issue in-year penalties despite the legislation clearly making provision for a supplementary assessment if 'before the end of the year, P makes a further default' (Sch 56 FA 2009, para 11(5).


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By PeteL
to redboam
25th Aug 2011 13:08

PAYE Penalties

Following an initial appeal against a £15k penalty, HMRC in rebuffing the appeal gleefully responded that on further investigation the penalty had in fact had been wrongly calculated and in fact was now £22k.

Whilst I have read the earlier comments from some of the 'saints' who believe that we all knew what the penalties were and therefore should shut up and pay up, as none of the payments were more than 10 days late and no interest was levied as the full years payments were made settled by 19th April, whilst I know it is a penalty and not an interest charge the £22k penalty for what was effectively 110 days late payment of £60k cannot be regarded as proportionate.


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to AnonymousUser
21st Dec 2011 16:19




Did you have any luck in appealing these or what was the outcome for the client?



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