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HMRC internal manual

Compliance Handbook

Penalties for Failure to Pay on Time: Rules for specific taxes: Pay As You Earn (PAYE) and National Insurance Contributions (NIC): Obligations: Recovery Action - Notices and Certificates

Where an employer fails to pay their in-year PAYE by the 22nd of the month if paying electronically (otherwise 19th of the month) Debt Management may issue Notices and/or Certificates in respect of the amounts unpaid.

For penalty purposes the due date for the in-year payments does not change and any amount that the employer pays after the due date may attract default and further penalties (see CH152450).


Fox & James Ltd fails to make any monthly payments due for the periods ending 5 May 2011, 5 June 2011 and 5 July 2011. The employer confirms that the business is still operating and has employees. In August 2011 recovery action is considered and based on the previous periods’ remittances a P101 notice is issued for the period 6 April 2011 to 5 July 2011. The notice is dated 29 July 2011 and the estimated liability is £45,000. The employer does not pay any of the £45,000.

The due dates are 19 May, 19 June and 19 July respectively.

The penalty dates are 20 May, 20 June and 20 July respectively.

Because the failure to pay the amount due for the month ended after 5 May 2011 was the first late payment for the tax year it does not count as a default and does not incur an initial penalty.

The penalty is therefore £30,000 x 1% = £300 (based on 3 failures but only 2 defaults).

Fox and James Ltd will be liable to further penalties if any amount remains unpaid after 6 and/or 12 months. The further penalties also apply to the un-penalised first default if any amount remains unpaid after 6 and/or 12 months. The penalty is 5% of the amount which remains unpaid.