PAYE direct debit interest charge anomaly confirmed by HMRC

HMRC have confirmed that interest charges showing on employers' online Business Tax Accounts, where direct debits have been collected after the due date, are correct, but are cancelled on the same day once the payment is processed.

• Employers have had the ability to pay PAYE liabilities by direct debit since October.
• Payment can be taken for the following charges:
  • Full payment submission.
  • Employer payment summary. 
  • Construction Industry Scheme.
  • Apprenticeship Levy.
  • Class 1A NICs.
  • Earlier year update.
• Concerns have been raised by employers at interest charges being shown on their online Business Tax Accounts.
• The Due date for electronic payments for any PAYE liabilities is the 22nd of the month following submission.
• HMRC's system sends an Advance Notification to the employer on the 20th of the month or the next working day.
• Payment is then taken three working days after this notification. This will always be after the 22nd of the month.
• HMRC have confirmed that the system recognises that the Payment is late and charges interest.
• They have also confirmed that where payment is received on that day, the interest charge will be reversed. If payment is not received (for example, because of a lack of funds in the bank account), the interest charge will stand from the 22nd.
• HMRC have said they are looking at whether the interest charge can be removed from the system so as to alleviate any confusion, but there are no timescales for this.
• Dates to be aware of for setting up direct debits are:
  • 15 December for December payments.
  • 17 January for quarterly payments.

Useful guides on this topic

Employer Bulletin: August 2022
HMRC have published their Employer Bulletin for August 2022. We have summarised the key content for you, with links to our detailed guidance on the topics covered. 

Companies: Filing & payment dates
What are the filing and payment deadlines for companies? What penalties apply?

PAYE: Paying HMRC
How do I pay PAYE to HMRC? What payment methods are there? What payment reference should I use?  

Penalties: PAYE and late payment
What tax penalties apply for late paid PAYE and NIC. What should an employer consider when handling late payment issues under PAYE? How are penalties calculated and how can you appeal?