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bigduckontax
bigduckontax, Accountant
Category: Tax
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Ive started trading via limited company on 1 February 2014

Customer Question

I've started trading via limited company on 1 February 2014 and paid regular payments to my personal account from the company account. I am just about to register for employer PAYE in real time. What is the best way to accounting for the payments without getting late penalty notice?
Submitted: 3 years ago.
Category: Tax
Expert:  bigduckontax replied 3 years ago.
Hello, I'm Keith and happy to help you with your question.
I would suggest that you make the appropriate real time returns as soon as possible.
You may be in default, but if you are speedy in getting on line HMRC may be lenient. If you paid yourself in the 13/14 tax year then you may be in for a spot of bother. If you fudge your payments to yourself into the first month after registration you may pay more National Insurance than necessary and your PAYE Income Tax will produce a bit of a wobble in subsequent months. Please remember if the company owes you moneys for setting up, buying stock etc the these are effectively a loan by you to the company and their reimbursement outside the scope of PAYE. This might be of considerable help to you, particularly in the 13/14 tax year.
The HMRC guidance on penalties is long and complex and you can find it by entering 'PAYE/National Insurance late payment penalties' on any search engine. I have extracted the more useful section for you:
'Penalty rates and how they will apply
Penalties are charged on each PAYE reference number (also called a 'PAYE scheme'). Therefore, if you operate more than one PAYE scheme you need to make sure that amounts due for each individual PAYE scheme reference are paid in full and on time.
The total penalty charged can be made up of a number of items:
a default penalty, for failure to pay monthly/quarterly payments on time and in full
Penalties for amounts still unpaid after 6 and 12 months
There are also additional penalties for amounts charged annually or occasionally.
The rest of this section explains how the penalties apply for different types of payment.
Monthly or quarterly PAYE payments
You will not be charged a penalty if only one PAYE amount is late in a tax year - unless that payment is over 6 months late.
The amount of the penalty will depend on how much is late and how many times your payments are late in a tax year. The table below shows how the penalties are calculated.
For tax years 2014-15 onwards no penalties will apply where there is a small difference in the amounts paid over each tax period compared to the amounts reported as due on your Full Payment Submissions (FPS) and any EPS - where appropriate - for the same period. However, daily interest will continue to accrue on all unpaid amounts from the due and payable date to the date of payment.
Penalty charges for late monthly and quarterly PAYE payments
Note: The first failure to pay on time does not count as a default.'
As you will almost certainly be on the quarterly return basis I don't think you have much cause to worry as you have only missed the June return.
I do hope I have helped set your mind at rest pretty well over this matter.
bigduckontax and other Tax Specialists are ready to help you
Expert:  bigduckontax replied 3 years ago.
Thank you for your support.