PAYE RTI News
Interest on PAYE charged in-year for first time
May 20, 2014
The way HMRC charges interest has changed: from May 19, HMRC charges interest on unpaid sums from the day those funds are due. This includes unpaid PAYE, CIS, Class 1 NICs and Student Loan deductions, but also any specified charges raised by HMRC and, once they are live, any automated penalties incurred by employers. HMRC issued guidance in March for employers on how to avoid an interest charge in an ‘at a glance’ guide, stating that employers must pay by the due date the difference between:
- what you report on your Full Payment Submission(s) (FPS) received by the 19th of the month that follows the end of the tax month it relates to, together with any CIS charges for that tax month
- any deductions reported on an Employer Payment Submission (EPS), again by the 19th of the month that follows the end of the tax month it relates to.
Employers should also be aware that corrections made in a subsequent FPS sent after the 19th of the tax month to which it relates will not be reflected in the current month’s charge. This means that the amount paid at the 19th (or 22nd) should be that reported by the 19th, even if this amount is greater or smaller than the amount actually due – the correction will be shown in the next month’s charge.
Interest is charged daily from the date payment is due until it is paid in full: if paying by cheque this is the 19th of the month for most types of charge, for electronic payments this is the 22nd of the month.
Employers will be able to see interest accruing on the Business Tax Dashboard (Liabilities and Payments viewer) and HMRC will update the Dashboard regularly to show the interest position. However, there is currently no facility for tax agents to see this information without use of the employer’s log in details. Employers should be aware that accruing interest shown on the Dashboard is only a guide to what may be due: HMRC will only seek payment of interest once the original outstanding amount has been paid.
HMRC is aware of an issue whereby interest begins to accrue from the 19th of the month on the Business Tax Dashboard even though payment is usually made electronically on the 22nd; in these cases the interest will be cleared by receipt of the payment on the 22nd so no interest will be payable by the employer and HMRC says employers “do not need to worry” about this.
HMRC systems are currently experiencing a problem where employer charges are not being cleared by payments reported on an EPS. HMRC is aware of this error and it should be corrected in the near future. In a ‘What’s New’ message HMRC says that they “will not pursue this charge and employers do not need to contact HMRC about this.”
The introduction of in year interest on underpayments of PAYE due from an employer based on HMRC’s calculation of their liability to PAYE means that employers face interest accruing on disputed liabilities, of which they may be unaware.
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