Penalties for Statutory Payments

We are currently undergoing a review of Powers, Deterrents and Safeguards.

The aim is to support those who seek to comply but come down hard on those who seek an unfair advantage through non-compliance. This work includes reforming penalties for incorrect Returns for Income Tax, Corporation Tax, PAYE, VAT and NICs included in Finance Bill 2007. One aspect is that no penalty will be charged
where the person makes a mistake despite having taken reasonable care and a new concept of suspended penalty will be introduced.

Penalties for other taxes and other failures are currently being considered and Statutory Payments responsibilities are likely be included in the review. This would cover employers who deprive their employees of their Statutory Payments entitlements and employees providing false information to gain entitlement to Statutory Payments.

However this work is at a very early stage and subject to Ministerial decisions and public consultation. We will keep you updated on any changes.

The rest of this article gives a short summary of the current Statutory Payments penalties.

Broadly speaking the Statutory Payment offences now are:

  • Not paying what’s due to the employee
  • Not being entitled to Statutory Payment or funding claimed
  • Not giving HMRC information formally required
  • Not giving employees information required by law
  • Not providing records as required.

Existing PAYE and NICs regulations cover two further offences:

  • Not giving information (Statutory Payments) on the End of Year Return
  • Making a Return fraudulently or negligently with an incorrect entry (Statutory Payments).

A table summarising the offences which could now lead to penalties, and the maximum amounts, will be published on our website at a later date.

The penalties, as with most other HMRC penalties, are civil (not criminal). The maximum penalties are variable and apply for each offence. The largest penalty for a single Statutory Payment offence is £3,000.

There are rights of appeal against all penalties. We are currently checking to make sure our guidance and forms are clear about offences, penalties and rights of appeal.