UK Inland Revenue Payments – Proceed with Caution
A tightening in payment dates and penalties for PAYE has highlighted a crucial misconception regarding the payment process to HMRC.
It is not commonly known that HMRC bank accounts cannot receive the Faster Payment Service that the majority of other banks have now adopted.
You make an online payment, your bank says that it is being made under the faster payments system, and should be there same-day but unfortunately, this is not the case. The change to using Citibank for receiving tax payments now seems like a backward step as Citibank accounts, like some ex-building societies turned into banks, cannot accept faster payments. A cynic might argue that this is designed to enhance bank profits (the amount still leaves your account immediately, but does not arrive for 3 days), and also enable HMRC to charge fines and penalties for those payments being received a day or two late.
HMRC warn to make sure these payments are made in plenty of time to allow them to clear. Understandably employers making electronic payments under the faster payment system would think that with the advancement in banking technology that this warning would now be unnecessary.
The HMRC website states that this situation, which applies to all tax payments, will be reviewed in 2010, but as yet no update has been issued.
So as a general rule, make sure your payments get there early, and until HMRC themselves state otherwise, keep on doing so! HMRC suggest three days, however for a cautious move we would suggest four.
Late payments, penalties and interest charges are all a nightmare best avoided. We have a UK tax calendar which gives important UK Tax and VAT dates listed by month.
Paul adores tea - however he is not your "typical Brit". He despises bad customer service, does not come from either Oxford, or Cambridge - has good teeth, and speaks eloquently. He represents a UK accounting firm that concentrates on helping US companies enter the UK and succeed! Paul provides general UK tax, accounting and cultural insights in a light-hearted and practical way. He is, The UK Voice.