Lessons · Accounting · the liability, and the day it has to be handed over
The liability, and the day it has to be handed over
Withheld amounts and employer contributions are handed over on a schedule set by the authority receiving them. The schedule depends on the size of the payroll and it is not negotiable, and missing it is penalised separately from the amount itself.
Hone is a place to practise a career, one idea a day. This is one of its lessons, written out in full and free to read without an account.
In beta. This lesson was written for Hone and has not yet been checked by a qualified accountant. Practice material, not professional advice. What that means.
What it is for
Late payment is treated far more seriously here than with an ordinary supplier, because the money was never the business's. A supplier paid late is annoyed; an authority paid late applies a penalty that is a percentage of an amount you were only ever holding, and it does not care that the business was short.
How to think about it
Find the schedule that applies to your payroll size, in force now rather than last year. Diary it as a hard date. Treat the balance as untouchable between the pay run and that date.
Worked example
The schedule depends on the size of the payrollBigger payrolls usually remit more often.
It is set by the authority, not by the businessNot a payment term to be negotiated.
Penalties apply to lateness separately from the amountPaying in full but late is still a failure.
The balance is untouchable in the meantimeIt is somebody else's money that happens to be in your account.
Your turn
Name who sets the schedule on which withheld amounts must be handed over.
The remittance schedule is set by the receiving the money
Solve one, graded on the server
The trap
Treating a remittance like a supplier invoice that can wait a week in a tight month. It is the one payment where being short is not a cash flow problem to manage but an obligation already broken, and the penalty regime is built on exactly that distinction.