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HMRC internal manual

Debt Management and Banking Manual

Debt and return pursuit: PAYE: E-payment: legislation and interpretation: what we mean by payment ‘on time and in full’

What is meant by payment on time and in full?

For large employers payment on time and in full means that HMRC must have received cleared funds for the full amount payable by the 22nd of the month it relates to in the case of payment by an approved electronic method.

Cleared funds means the money must have been transferred into HMRC’s bank account by the payment date for the payment method used.

To avoid confusion with EDP and value dates we changed the heading on BROCS function VIEW TAXPAYER, Posting Summary in April 2004 to ‘EDP’ from ‘VALUED’. Similar changes have been made to BROCS functions REPAYMENT INTEREST (RPI), CALCULATE INTEREST (INT) and VIEW ARCHIVED DATA (VAD).

BROCS system changes were also made to ensure that payments get the correct EDP in relation to the type of payment, date of posting and expected value date. For example where payment is made by an approved electronic payment method with funds cleared on the 22nd the EDP will be set to the 19th as BROCS determines if a payment was on time if it has an EDP of 19th or earlier. For electronic payments you will need to add 3 calendar days to the BROCS EDP to determine the date HMRC received cleared funds and whether payment was received on time (i.e. by the 22nd) or not.

Payment by CHAPS and Faster Payments Service (FPS)

A CHAPS or FPS payment can take longer to process than the other electronic payment methods.

Although employers can make payments very quickly by CHAPS and FPS, BROCS and SAFE records won’t be updated the same day, it will normally take 2 days.

  • Day 1 FPS payment made.
  • Day 2 Electronic payment details received. BROCS / SAFE updated overnight and FP will be visible on BROCS / SAFE the following day.

Please note that:

  • FPS payments made between 10pm and midnight may take an extra day to appear on BROCS / SAFE
  • weekends and bank holidays will delay the update and it may be up to 7 days later before the employer’s record is updated.

FPS payments will be shown on:

  • BROCS as Payment Type ‘CHP’
  • SAFE as Payment Type ‘FPS’.

However, the EDP of such a payment received on time will show 19th or earlier even if posted to the BROCS record much later.

Payment by BACS and Direct Debit (DD)

Both are three-day processes with payment credited to HMRC on day three; however, there is a significant difference from the taxpayer’s viewpoint.

  • A BACS payment is debited from the taxpayer’s account on day one and credited to HMRC on day three.
  • A DD payment is both debited from the taxpayer’s account and credited to HMRC on day three.

The significant date for HMRC is the date the payment is credited to the HMRC account.

Payment by cheque, bankers draft and cash

Although the legislation compelling employers to pay electronically applies to all large employers it does not penalise large employers who pay by a non-electronic method provided they pay in full and on time.

The arrangements for employers paying by cheque are unchanged; cheques must be received in a HMRC office by 19th of the month to be classified as a payment on time.

A large employer is not mandated to pay their Class 1A NIC, due 19th July, or Class 1B NIC, due 19th October, electronically but may do so if they wish.

For the purposes of setting the EDP a banker’s draft is treated the same as a cheque.

It is HMRC policy not to encourage employers to pay by cash and this has not changed. However, where exceptionally a large employer pays their monthly deduction by this method on either the 18th or 19th of the month then you should give the payment an EDP of the 17th so this is treated by BROCS as a payment on time.

Late payments

Late payment for the purposes of the mandatory electronic payment legislation are payments with an EDP shown on BROCS later than the 19th of the month.

More information about late-payment penalties can be found in DMBM523500.

Employer’s action

22nd falls on a We must have cleared funds by Latest date for initiating payment by Telephone, Internet, Bacs Direct credit, Bank Giro and Santander Corporate Banking (payment at a Post Office) Latest date for initiating payment by CHAPS, FPS and Paymaster
Monday Monday 22nd Thursday 18th Monday 22nd
Tuesday Tuesday 22nd Friday 18th Tuesday 22nd
Wednesday Wednesday 22nd Monday 20th Wednesday 22nd
Thursday Thursday 22nd Tuesday 20th Thursday 22nd
Friday Friday 22nd Wednesday 20th Friday 22nd
Saturday Saturday 22nd Wednesday 19th Friday 21st; Saturday 22nd for FPS
Sunday Sunday 22nd Wednesday 18th Friday 20th; Sunday 22nd for FPS

The above table ignores Bank Holidays which need to be taken account of.

Unless payment is by CHAPS or FPS, which are same-day payment transfer facilities, it can take three bank working days for payment to reach our bank account. However, payment transfers from some Banks and Building Societies take longer. For guidance about when to initiate a payment, employers need to contact their own Bank/Building Society and find out:

  • how long they take to transfer payment
  • what their cut-off time for initiating a payment is.

In full

Because of the BROCS ‘up-to-date rules’, the system accepts any amount as payment in full and closes the IDMS work item.

Other employers

The legislation allows all other employers to pay by the payment date of the 22nd as long as the employer complies with both the requirement for the full payment to be in the HMRC’s bank account by the due date and to pay electronically by an approved method.