HMRC uses penalties to encourage compliance. There are 2 types to watch out for.
Payment penalties
Pay on time
There are deadlines for paying your taxes. If you’re late in paying, expect to receive a penalty. You may also be charged interest every day until you pay the bill.
Pay electronically
Cheques can get lost in the post. Paying electronically e.g. via online banking is quick and easily trackable.
Use the right reference
However you pay, always include your accounts office reference, otherwise your money will end up in an HMRC slush fund instead of being correctly applied against your account!
Filing penalties
File on time
You must report Pay As You Earn (PAYE) wages in “real time” – in other words, on or before payday.
Weekly, fortnightly, monthly, whatever. Every time someone gets paid through payroll, you must tell HMRC.
File accurately
That’s why it’s so important that you tell us – in advance – about any changes to your payroll.
You may have to prove to HMRC that you weren’t careless in making an error.
