What are the HMRC PAYE penalty charges for employers who fail to file their payroll information by the deadline?

In this article, we will look at both late filing and late payment penalties and describe how the penalties are calculated

We will also include information about the grounds for a PAYE appeal and how you can apply if you feel there has been a mistake.

When Could You Be Liable for a PAYE Penalty?

You are liable to receive a late filing PAYE penalty if:

  • Your Full Payment Submission (FPS) was late
  • You didn’t send the expected number of FPSs
  • You didn’t send an Employer Payment Summary (EPS) when you didn’t pay any employees in a tax month

The rules around this are laid out in the Finance Act 2009, Trusted Source – .GOV- Finance Act 2009, Schedule 56 which lays out the penalties for failure to pay tax.

How Much are the Penalties for Late Monthly or Quarterly PAYE?

The current PAYE penalties amounts are as follows:

Number of defaults in a tax yearPenalty % applied to the amount that is late in the relevant tax month (ignoring the first late payment)
1 to 31%
4 to 62%
7 to 93%
10 or more4%

If your submissions are filed more than 6 months late, you may also be subject to an additional penalty of 5 percent of the tax and National Insurance you should have reported.

A further penalty of 5% will be charged if you’ve not paid after 12 months.

Additional Fees if You Have not Paid by the Penalty Date

If you have not paid your PAYE (Pay As You Earn) taxes by the penalty date, you may be subject to additional fees. These fees can include:

Payment TypePenalty 1Penalty 2Penalty 3
Class 1A and Class 1B NICs, HMRC determinations and assessments, amendments or corrections to returns5% of amount due5% additional if not paid within 6 monthsa further 5% additional if not paid within 12 months of the due date

Appealing PAYE Penalties

If you disagree with a PAYE (Pay As You Earn) penalty imposed by HM Revenue and Customs (HMRC), you have the right to appeal the decision.

Potential grounds for appeal include:

• Ill health
• Incorrect data on the returns
• The return was filed on time
• Death/bereavement
• Fire/flood/natural disaster
• IT difficulty
• No payments made to employees
• Theft/Crime
• Other…

Appealing against a filing penalty is a relatively simple and straightforward process that can be completed using HMRC’s online service.

Here are the steps you can take to appeal a PAYE penalty:

How to Appeal

  1. Request a review: You can request a review of the penalty decision by writing to HMRC. This is known as an “informal review.” During this process, HMRC will reconsider its decision and may cancel the penalty if they find it to be incorrect.
  2. Submit an appeal: If the informal review does not result in the cancellation of the penalty, you can submit a formal appeal to HMRC. This can be done in writing or online.
  3. Attend a tribunal: If HMRC does not cancel the penalty following the formal appeal, you can request a hearing before a tax tribunal. This is a formal process, and you will have the opportunity to present evidence and argue your case.

How can we help?

We have had great success assisting clients facing PAYE penalties, as well as problems making VAT payments or being unable to pay their corporation tax bill on time and have managed to reduce the amount they owe even when faced with Security Bond joint and several requirements. If you have had an initial appeal refused and wish further advice, please contact our expert team today for a free, no-obligation consultation.