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HMRC IT glitches spell disaster for payment on account demands

Many taxpayers (though it is not clear exactly how many) may find that the payment on account demands they are expecting this Summer don’t arrive, meaning they could get a shock after Christmas.

This is because of problems with HMRC’s IT systems earlier this year, which affected calculations for 2018/19 payment on account.


Payment on account explained

Most individuals within self-assessment, with a tax bill of £1,000 or more, will settle their liabilities in instalments.

This is generally done by way of making payments on account in January and July. A final balancing payment is then due in the following January.

The amounts that are due depend on the individual’s tax liability from the previous year.


Demands become disaster

Late in 2018, it became apparent that HMRC systems had not always processed payments on account for 2018/19 correctly.

Consequently, a number of taxpayers’ self-assessment statements did not include demands for the January 2019 payment on account.

Unless those affected made contact with HMRC to correct their position at the time, they will not receive a demand in June or July for the second payment on account, which would be due by 31 July 2019.

Taxpayers do not need to do anything if they have not received payment on account demands for 2018/19. Instead, the taxpayer will receive a demand from HMRC for the full amount of tax in January 2020.

Therefore, we would advise that you ensure you have set the money aside to fulfil this liability.


Author insight:

Sarah Dixon comments:

“If a taxpayer makes no payments on account during 2019, the bill that arrives in January 2020 could be significantly larger than expected.”


“Individuals whose demands are delayed, should either set aside the funds needed ahead of January 2020 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.”


“However, the risk with making a voluntary payment is that, where HMRC has no record of an outstanding liability, its systems may see this as overpayment and automated refunds may be triggered at a later date.”


An HMRC spokesperson stated: ‘We are aware of an issue with payment reminders for a small number of customers. Those affected can contact us and we’ll put it right. No additional interest will be payable due to this problem.’

If you have any concerns about this announcement, or about fulfilling your 2018-19 tax liabilities, speak to your usual adviser or contact us today on 01767 315010.

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