Tax ‘payment on account’ mix-up – budget for larger than expected payment in January 2020, advises Saffery Champness

Jamie Younger

It transpires that this is because the HMRC system had not been set up to accept the first 2018/19 payment on account for some taxpayers.

Saffery Champness has also had confirmed that HMRC will not request payment of these amounts, which may now incorrectly be showing as late on some taxpayer’s accounts.

Instead, HMRC has said that it will collect the underpaid amounts as part of any balancing payment in respect of the 2018/19 tax year and due for payment by 31 January 2020.

Interest will not be charged on these underpaid amounts.

Jamie Younger, Partner, Saffery Champness, and head of the firm’s landed estates and rural business group, said: “It’s common sense that those who have received refunds in error should now budget to make these payments in the future. Unfortunately, this is not an unexpected windfall. Where unpaid payments on account have arisen from this issue, any interest demanded by HMRC should be challenged. Where there has been a genuine underpayment or late payment, interest and penalties may be due. A conversation with your advisor is a good move in either circumstance.

“Also, given the potential for delays in receipt of the Basic Payment for 2019, January 2020 cash flow could be tight for many farming businesses. It would therefore be wise to factor these tax payments into the business cash flow now, or, better still, if the funds are available, get the outstanding tax bill paid.”