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HMRC internal manual

Statutory Payments Manual

HM Revenue & Customs
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Penalties - formal decisions

A penalty can only be determined by HMRC after a formal decision that they are liable to make a statutory payment has been made and the appeal period has expired. Formal decisions are made under:

  • Section 8 of the Social Security (Transfer of Functions etc.) Act 1999
  • Article 7 of the Social Security Contributions (Transfer of Functions etc.) (Northern Ireland) Order 1999 (SI1999/671).

Most decisions on liability to pay a statutory payment will be made by an Officer (O) Band in the SP Disputes Team, NIC& EO. Decisions may also be given by an Officer in Employer Compliance if they find that an employer has not paid the correct amount of statutory payment to their employee. For more information see the Decisions and Appeals for National Insurance and Statutory Payments (DANSP) manual.

Employers must be warned about the possibility of penalties on the face of the decision.

You should not make a penalty determination, unless the employer has not made the payment by the required payday.

Time limits for the employer to pay a statutory payment to their employee

Once a formal decision has been made confirming statutory payment entitlement/liability, the employer must either appeal within the 30 days or pay any outstanding statutory payment to the employee by the first normal payday after the 30 day appeal period has expired. If the employer appeals against the decision, they do not have to pay any outstanding statutory payment until the result of the appeal is known.

If the First-tier Tribunal decide that the employer is liable to pay a statutory payment the employer should pay the employee by the first normal payday after they receive the notice of decision unless they have applied for and been granted leave (if the application has been processed) to appeal that decision on a point of law to the Upper Tribunal.

If, because of their payroll arrangements, the employer cannot make payment on the first normal payday they must pay the arrears on the second normal payday. If, exceptionally, the employer would not normally have paid the employee until after the payday specified above if they had not been entitled to a statutory payment, the employer must pay no later than the first day they would have paid wages for the same period.