If you are within Self Assessment, you may find you have been affected by an HMRC system error which could mean a higher tax payment in January.
Self-assessment statements for payments on account have either not been sent out at all or show a zero balance where a payment was due on 31 July. If you’re not entirely clear about what you need to pay and when it is due to be paid, the consequences of this incorrect or missing information may mean you have skipped an outstanding payment for January and/or July or have been undercharged. When it comes to the next payment period in January 2020, you could be faced with a much higher bill to pay to cover the missed payments.
The fault lies in the HMRC system failing to generate payments on account for 2018/19 for some taxpayers. Despite knowing about the error for some months, HMRC has not corrected it, leading to incorrect balances showing for both the 31 January and 31 July payment.
The implications for cashflow are obvious, where money set aside for your tax payments could end up being spent over the next six months, not to mention the usual post-Christmas expenses most of us tend to find in January.
If you were expecting to submit a half-yearly payment and either received a low or zero balance or no statement at all, you should contact your tax advisor or HMRC as soon as possible. While the Revenue has said taxpayers affected will not have to pay interest for underpayment or non-payment, it is unlikely that there will be such generosity on demands for the full amount owed in January.
Effectively, individuals could find themselves with an 18 month tax payment, being the full liability for 2018-19 plus the first payment on account for 2019-20, to pay on 31 January 2020.
Planning to file your tax returns and pay regularly should be factored into your financial workflow, regardless of whether HMRC notifies you or not. HMRC does not regard lack of understanding of the finer points of self-assessment as a ‘reasonable excuse’ for late filing or late payment, so please get in touch if you may have been affected by this latest problem.
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