PAYE – LATE PAYMENT PENALTIES

2010 saw HMRC bring in penalties for late payment of PAYE.  The late payment penalties apply to all employers and contractors – whether you employ one or several hundred employees or subcontractors.

Up to recently HMRC have been sending 2 warning letters if they think you have not paid the due PAYE on time.  In April 2014 this will change and only one warning letter will be sent before penalties are issued.

Penalty charges for late monthly and quarterly PAYE payments (source HMRC)

Note: The first failure to pay on time does not count as a default.

Example: ABC Ltd paid four payments late in the tax year 2013-14. The first late payment is not counted as a default therefore they have three defaults in total, which means that a penalty of 1% is due on the total amount of PAYE paid late (excluding the first late payment).

For tax years 2014-15 onwards, if ABC Ltd paid months 2-6 late, the first late payment (month 2) is not counted as a default. The employer has one default in the first quarter (month 3) and three in the second quarter (months 4-6). This means that a penalty of 1% will be charged on the amount paid late for month 3 at the end of the first quarter (July). At the end of the second quarter (October) a penalty of 1% of the month 4 and 5 amounts, and 2% of the month 6 amount of PAYE paid late, will be charged.

No excuses!

HMRC will not accept excuses. Here are some of the examples they have been given previously

• Pressure of work
• Lack of information
• HMRC did not remind me to pay
• Ignorance of basic law and guidance

In addition, the law says that HMRC cannot usually accept as reasonable:

• Cash flow problems/lack of money – HMRC cannot treat cash flow problems or lack of funds as reasonable unless they are due to unforeseeable events outside your control – if you are having difficulty paying there’s information in the next section ‘What to do if you can’t pay’
• Relying on someone else. HMRC cannot normally accept that you have a reasonable excuse just because you asked someone else to make the payment and they did not – however if you have done all you reasonably can to make sure the person does make the payment on time, you may have a reasonable excuse, for example, you may have explained carefully to the person what they have to do, and by when – you may have checked on their progress and reminded them.

“With the 31 January tax return deadline just around the corner, HMRC has revealed the ‘Top 10 oddest excuses’ for sending in a late return.

The following bizarre, exotic and flimsy excuses have all been used by tardy taxpayers:

1.  My pet goldfish died (self-employed builder)
2.   I had a run-in with a cow (Midlands farmer)
3.  After seeing a volcanic eruption on the news, I couldn’t concentrate on anything else (London woman)
4.   My wife won’t give me my mail (self-employed trader)
5.  My husband told me the deadline was 31 March, and I believed him (Leicester hairdresser)
6.  I’ve been far too busy touring the country with my one-man play (Coventry writer)
7.  My bad back means I can’t go upstairs. That’s where my tax return is (a working taxi driver)
8.   I’ve been cruising round the world in my yacht, and only picking up post when I’m on dry land (South East man)
9.  Our business doesn’t really do anything (Kent financial services firm)
10.  I’ve been too busy submitting my clients’ tax returns (London accountant)

All of these people and businesses received a £100 penalty from HM Revenue and Customs (HMRC) for filing late. They appealed against the decision using these excuses, but were unsuccessful.”

Message from Business Works:

Your  tax return must be submitted to HMRC before 31^st January 

Clients – if you haven’t sent us your paperwork yet, please do not delay.

If anyone needs any help and advice we are here to help – call us on 0113 2864486 for a no obligation chat.

The basics

Automatic enrolment affects all employers with staff in the UK.

Staff meeting the criteria must be entered into a pension scheme.

Employers must start doing this from their staging date.

Employers must write to all staff to tell them how they’ve been affected.

What is automatic enrolment and why do I have to do it?

The law on workplace pensions has changed to make it easier for people to build up a pension.  People in the UK are living longer, yet too many people are under-saving or not saving at all for what could be a long retirement.

Automatic enrolment means that, rather than having to actively choose to join a pension scheme, staff are put into one by their employer as a matter of course. However there is an opt-out option, should the employee wish.

When will I have to take action?

Automatic enrolment duties come into force for the employer on their ‘staging date’.   Don’t know your staging date?  Call us on 0113 2864486 and we will tell you.

Who is put into a pension scheme?

Staff will be automatically enrolled who are:

• aged 22 to state pension age
• working in the UK
• earning over £9,440 a year.

Some staff who don’t meet the criteria above are able to opt in to the employer’s pension scheme that is being used for automatic enrolment.

Employers have to pay a minimum employer contribution for all staff that are automatically put into this scheme.

Certain other staff can ask to join a pension scheme. The employer must put these staff in a scheme, but the rules are different and there’s no requirement for an employer contribution.

Employers – Where do I start?

The first thing you should do is find out your staging date. Once you know when this is, you can start planning to make sure you’re ready in time.

Start planning early … You’ll need to make some changes to allow for automatic enrolment, such as:

• setting up a pension scheme or modifying an existing one
• making any necessary changes to payroll so it can handle the new requirements
• putting systems in place to monitor the ages and earnings of your staff
• writing to your staff.

If you have any questions please contact us on 0113 2864486.

Seasonal Gifts

HMRC advises that an employer may provide employees with a seasonal gift, for example a turkey, an ordinary bottle of wine or a box of chocolates at Christmas. All of these gifts can be treated as trivial benefits.

If the gift extends beyond one of the items mentioned above, such as from a bottle or two to a case of wine, or from a turkey to a large Christmas hamper, you will need to consider the contents and cost before being able to determine whether the benefit is trivial.

For an employer with a large number of employees the total cost of providing a gift to each employee may be considerable, but where the gift to each employee is a trivial benefit, this principle applies regardless of the total cost to the employer and the number of employees concerned.

Where an employer provides employees with seasonal immunisations against seasonal flu (“flu jabs”), the benefit should be treated as trivial. This treatment only applies to routine seasonal flu jabs and does not apply to medical treatment of any sort or to other immunisations, such as immunisations against pandemic flu or other diseases.

If you would like to discuss your staffs Christmas gifts with us, please get in touch – 0113 2864486.

Can you claim Research and Development Credits?  Don’t lose out on this very generous cost uplift for tax purposes.

Since 2000-2001 there have been 85,000 claims and £8billion relief claimed.

More than 24k different companies have claimed under the SME scheme and 6300 under the Large scheme.

In 2011-12 there were 12190 claims.

£11.9 billion R&D expenditure giving £1.2 billion tax relief. Split £420m SME scheme and £780m under the Large scheme.

In Yorkshire there were 840 claims (6.89% of the total) worth £38m.

For more info, contact Jo on 0113 286 4486 or jo@businessworksuk.co.uk

What is it?
The Enterprise Finance Guarantee (EFG) is a Government loan guarantee scheme to enable lending
to small and medium sized enterprises (SMEs) which can demonstrate that they have sufficient cashflow to meet lenders loan affordability requirements, but are lacking adequate security to obtain a
commercial bank loan.
Principally used to support loans of between £1,000 and £1 million, and repayment terms
between three months and 10 years. EFG also supports overdrafts and invoice finance facilities,
which have shorter repayment terms of two years and three years respectively.
How it works and who can apply
All EFG loans are provided by the participating lenders using their own funds. The Government
provides the lender with a 75% guarantee for each loan, but the borrower remains liable for
repayment of 100% of the loan.
EFG loans are available to a wide variety of businesses. However, the following criteria applies:
Ø The business must have an annual turnover of less than £41m, but there is no limit on the
number of employees.
Ø The business activity being financed must take place in the UK, although the SME itself might
be foreign owned or registered abroad.
Ø The borrower contributes to the cost of the scheme by paying a 2% per annum premium
which is in addition to the fees and charges applied by the lender.
How to apply
A business will always apply for a commercial loan before EFG is considered. If a business meets the
lenders’ loan affordability requirements, and would have been offered a traditional bank.

Do you qualify for working or family tax credits?

If you have already applied and are receiving payments, you must phone 0345 300 3900 and give your actual earnings and any changes in your circumstances before 31st July or your payments will stop.

Alternatively you can return your renewal pack containing all the necessary information. But this too, must be with the tax credits office before 31st July.

In the beginning, there was the Plan.

And then came the Assumptions.

And the Assumptions were without form,

And the Plan was without substance.

And darkness was upon the face of the Workers

And they spoke among themselves saying, “It’s a crock of shit, and it stinks.”

And the Workers went unto their Supervisors and said, “It is a pail of dung, and we can’t live with the smell.”

And the Supervisors went unto their Managers saying, “It is a container of excrement, and it is very strong, such that none may abide by it.”

And the Managers went unto their Directors saying, “It is a vessel of fertiliser, and none may abide it’s strength.”

And the Directors spoke among themselves, saying to one another, “It contains that which aids plant growth, and it is very strong.”

And the Directors went to the Vice Presidents saying unto them, “It promotes growth, and it is very powerful.”

And the Vice Presidents went to the President saying unto him, “This new plan will actively promote the growth and vigour of the company with very powerful effects.”

And the President looked upon the Plan, and said that it was good,

And the Plan became Policy.

And that is how shit happens.

If you have undertaken projects that you feel pushed the boundaries of knowledge in your field, for example, you found yourself at point A and wanted to get to point B in terms of product or service delivery but had no idea how to get there? – therefore you incurred time and costs in trying to find solutions. You may have hit roadblocks along the way?

Then you may have a claim to make for R&D. This falls into one of two categories.

You can enhance the costs you incurred to reduce a profit or increase a loss carried forward. Or you can claim a refund credit.

A dividend may only be paid where there are sufficient distributable profits available.