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HMRC internal manual

Debt Management and Banking Manual

HM Revenue & Customs
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Debt and return pursuit: PAYE: the late payment penalty calculator


Penalties are not calculated automatically, they are calculated using a specifically designed BDApp (Business Designed Application) called the PAYE late payment penalty calculator and then raised clerically through SAFE. The calculator calculates the penalty from information copied and pasted from BROCS or entered clerically. It allows you to:

  • clerically enter data
  • paste payment data from BROCS
  • overwrite, add, delete or amend fields.

For each payment and amount outstanding entered the calculator decides:

  • the payment due date (in-year PAYE only) - where 22nd (electronic payment due date) falls on a weekend, the calculator will adjust this to the previous bank working day as this then becomes the due date.
    Note: The calculator will not usually make any adjustment if the 22nd falls on Good Friday (as it did for month 12 2010-11) or Easter Monday. However, for the year 2010-11 only an IT fix was put in place so that it will make this adjustment. For any other year you will have to amend the due date clerically.
  • if payment was late - if so how late (to identify if 6 or 12 month penalties also apply)
  • if the BROCS EDP needs 3 days adding on (in-year PAYE only)- it will do this for any electronic payment
  • if today’s date to be used as the notional date of payment -it will do this where the date of payment is left blank (that is, if amount is unpaid).

Penalty calculation

For each payment entered the calculator decides which payments were late from the:

  • month number
  • due date
  • date of payment (actual or notional) and
  • payment type (electronic or non-electronic).

For late payments or amounts unpaid, it enters LATE in the ‘Paid Late?’ column on the Calculator screen. The field is left blank for payments made on time or early.

The calculator then decides what penalty percentage(s) to apply depending on the:

  • number of months/ quarters for which payments were late and the
  • length of time they were late.

You can clerically over-ride this by amending the data, for example if a late payment was included in a TTP arrangement or a payment should be split between months. Each time you amend the data, the calculator will automatically re-calculate the penalty. The calculator screen shows (for each payment entered) if a penalty has been calculated and the amount.

The Main screen summarises the information from the Calculator screen showing:

  • total of late payments and penalties for each month and
  • overall totals for the year.

Example: Month 1 payment paid one week late and two month 3 payments paid late. The Calculator screen shows:

Month 3- £20,000 paid late by 7 months.1% & 5% penalty due = 6% (£1,200)

Month 3 - £20,000 paid late by 3 months. 1% penalty due (£200)

Overall penalty = £1,400

Main screen shows:

£40,000 paid late, with a late payment penalty of £400 (that is 1%) and a 6 month penalty of £1,000 (that is 5%).