Are you a victim of HMRC confusion?

The Association of Taxation Technicians has issued a press release warning self-assessment taxpayers of an HMRC system error which failed to correctly process the payments on account information for the tax year period 2018/2019.

If you are a self-assessment taxpayer with tax liabilities in excess of £1,000, HMRC expect you to make payments on account towards your tax liability, these payments are split into two instalments with the first  becoming due 31^st January (Tax Return Deadline Day) and the second on 31^st July.

Are there any exceptions?

Self-assessment taxpayers with annual tax demands of £1,000 or less do not have to make payments on account. Neither do taxpayers who are in self-assessment but where 80 per cent or more of their total annual tax is collected at source (for example through PAYE).

Why is this an issue for you?

Avanti MD, Victoria Sharp explains, “Beware that there will be no leniency from HMRC if you miss your POA for July, because no demand has been issued, you may have an unexpected hefty tax bill in January to reclaim the payment due in the previous July…not the way anyone wants to start the new year!”

AAT Warns, “some people may not receive the tax demands they expect by the end of July”

If you don’t want to fall foul of HMRC, take a moment to contact your accountant and check if you have a payment on account due for 31^st July 2019

Jon Stride, Co-Chair of the ATT’s Technical Steering Group explains your next steps:

“Individuals who do not receive expected demands should either set aside the funds needed ready for next year or, if they wish, they can make a voluntary payment on account to HMRC of their July payment – and their January payment if that was also missed.

“The risk with making a voluntary payment is that there is no guarantee that HMRC will retain the tax paid. Where there is no corresponding liability on the individual’s record it is possible that HMRC’s systems will see any payments made on a voluntary basis as overpayments, and may well seek to refund the money later as part of their automated processes.

“It is now too late to prevent refunds occurring by asking HMRC to reinstate payments on account for 2018/19 unless the individual voluntarily paid their first payment on account on time in January 2019. Affected taxpayers who cannot get their payment on accounts reinstated will therefore need to consider making their own provisions for a larger than usual tax bill in January 2020.”

If you need help with your tax return give Avanti a call on (08000) 388 799 for proactive friendly advice.