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Self-assessment payments on accounts

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Some taxpayers were not informed by HMRC of the amount of tax to pay on account by 31 January 2019. 

The due date for the first payment on account for the tax year 2018/19 was 31 January 2019. However, according to HMRC there is an ongoing problem whereby payments on account for 2018/19, in some instances, have not been created by HMRC’s systems from the 2017/18 tax return. 

This means that some taxpayers were not informed of the amount of tax to pay on account by 31 January 2019. And reportedly, this problem won’t be fixed before 31 July 2019 (the due date for the next payment on account).   

Payments on account are due where a taxpayer has less than 80% of their tax collected at source (eg under PAYE) and pays more than £1,000 in income tax per year. So, this is mostly likely to affect self-employed individuals. Company shareholder directors may also be affected if they extract the majority of their income from their company as dividends. 

Affected clients could make a voluntary payment on account. However, there is a risk that such a payment could be automatically repaid by HMRC’s computer, so it may be easier for clients to deposit all the tax due into a savings account and pay it all in January 2020. HMRC has confirmed that if the demands for payments on account have been omitted from the taxpayer’s statement, that the taxpayer will not be charged interest as long as full payment of all the tax due for 2018/19 is made by 31 January 2020.   

If the taxpayer did pay the correct amount of tax by 31 January 2019, including the payments on account due, but their statement did not show a demand for the 2018/19 tax, this can be fixed if they, or their accountant, ask HMRC to add the payment on account to their taxpayer record. This will ensure that the tax is not repaid. However, according to HMRC, this adjustment should only be requested if the taxpayer has, in fact, made the payment on account for 2018/19, otherwise interest will accrue until the payment is made. 

Please note that this document was prepared by a third party and as such Brewin Dolphin is not responsible for the content or able to answer queries on the topics dealt with. While we believe it to be correct at the time of writing, Brewin Dolphin is not a tax adviser and tax law is subject to frequent change. Therefore you should not rely on this information without seeking professional advice from a qualified tax adviser, who should also be able to assist you with any questions on the content. 

This document was prepared as a general guide only and does not constitute tax or legal advice.