The deadline for submitting P35 end of year returns has passed (19 May) and we are now seeing the extent of the penalty system that HM Revenue & Customs (HMRC) introduced in May 2010.

Late payment penalties apply to all employers and contractors and apply to monthly, quarterly and annual periods of PAYE starting on or after 6 April 2010.

HMRC charges late payment penalties on PAYE amounts due that are not paid in full and on time, including:

• monthly, quarterly or annual PAYE (Pay As You Earn)
• student loan deductions
• Construction Industry Scheme (CIS) deductions
• Class 1 National Insurance contributions (NICs)
• annual payments of employers' Class 1A and Class 1B NICs
• determinations made by HMRC relating to Income Tax and National Insurance

Penalties will be charged on each PAYE reference number independently. Therefore, if you operate more than one PAYE scheme you need to make sure amounts due for each individual PAYE reference are paid in full and on time.

Monthly or quarterly PAYE payments

You will not be charged a penalty if only one PAYE amount is late in a tax year - unless that payment is over six months late.

The amount of the penalty will depend on how much is late and how many times your payments are late in a tax year. So if you pay part of what is due on time then any penalty will only be charged on the part that is late.

For further advice please contact Amber Accounting on 01382 312140 or email info@amberaccounting.co.uk.