20/12/2011 by Geoff.

As you may be aware HMRC introduced penalties for late-paid PAYE and related liabilities back in April 2010 but due to the way that the penalties are calculated the penalties have only started to be levied now.

Unfortunately it is not yet clear how this penalty regime will be applied and this may remain the case until the Real Time Information system is implemented. This is because HMRC’s system does not flag up that a penalty situation has occurred until after the last payment has been made and the year end reports have been filed.

It is only at this point that HMRC will be able to calculate if a penalty is due and the rate at which that penalty should be levied. The penalties will be levied as follows:

·    First default – attracts no penalty if it is the only late payment in the year

·    2, 3 or 4 defaults in the year – the penalty levied will be 1% of the total amount defaulted (including the first default)

·    5, 6 or 7 defaults in the year – the penalty levied will be 2% of the total defaults (again including the first one)

·    8, 9 or 10 defaults in the year – the penalty levied will be 3% of the total defaults (including the first one)

·    11 or more defaults – the penalty levied will be 4% of the total defaults (including the first one)

On top of this any amounts that remain unpaid after more than 6 months after the penalty date will be liable to a further 5% penalty with a further 5% penalty applying after 12 months.

As you can see the late payment of PAYE and related liabilities could very quickly become an expensive problem, but is one that can easily be avoided if payments are made on time.

Simone Greasley

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20/12/2011 by Geoff.

Many entrepreneurs first venture fails. Rather than stop you trying again see it as an opportunity to learn. This can lead to finding a more efficient way of doing things and hence early failure can often breed later success. In the States entrepreneurs that have failed are seen to have a badge of honour!

You’ll have your own lessons to learn but common reasons for failure are:

·         Poor marketing – do your market research and know who the players are

·         Poor brand strategy – make everything you do attractive

·         Weak cash flow – know when you’re going to get paid – strong cash flow is a priority

·         Uncontrolled growth – know the balance between revenue and costs

Should you still fail it pays to wind up a business legally treating staff and investors with respect.

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