HMRC IT glitches spell trouble for taxpayers

Many taxpayers may find that the tax demands they are expecting this summer don’t turn up, because of problems with HMRC’s IT systems which affected calculations for 2018/19 payments on account.

Many individuals within the scope of self-assessment, with a tax bill of £1,000 or more, will settle their liabilities by making payments on account in January and July, followed by a final balancing payment in the next January.

Towards the end of 2018, it became apparent that HMRC systems had not always processed payments on account for 2018/19 correctly. Consequently, some taxpayers’ self-assessment statements omitted demands for the first instalment, due in January 2019.

Unless those affected contacted HMRC to rectify their position at the time, they will not receive a demand in June or July for the second instalment, which would be due by 31 July 2019.

HMRC has confirmed that where no demands have been issued, no action is required from the taxpayer and they will instead receive a demand for the full amount of tax in January 2020. HMRC will not charge interest for late payment – assuming no further glitches!

I hope that taxpayers are not fooled into thinking that they have had an unexpected tax windfall. An extravagant Christmas, funded by money that should be set aside for tax, could make for a sobering start to 2020 when the tax bill arrives.

Some of our clients who had paid the instalment, as advised by us, have had it refunded by HMRC; luckily, we have been able to warn them not to spend it.

If you have concerns about this announcement, or about fulfilling your tax liabilities, speak to your usual adviser or contact me today on 01767 315010.