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Problems with 2018/19 tax Payments on Account due in January and July 2019 

HMRC have a major computer glitch with regard to 2018/19 Payments on Account. 

For some, but not all, taxpayers the January 2019 Payment on Account is not showing on HMRC’s record, despite it clearly being due, according to the 2017/18 Tax Return that was submitted by 31st January 2019. 

As a result, this may mean that you receive an unexpected tax repayment shortly, in respect of the first Payment on Account that was paid in January 2019.

Although that Payment on Account was due on 31st January 2019, HMRC have confirmed that they will not be charging interest when it is eventually paid next January.

It seems likely that the second Payment on Account may also not be requested in July 2019.

Therefore, the whole of the 2018/19 liability may fall due on 31st January 2020, as the Payments on Account for 2018/19 will not have been made.

In January 2020 you will also have to pay 50% on account for 2019/20 and this will be a nasty shock for anybody who has not set aside the requisite funds.  If you wish to pay the 2018/19 Payment on Account, although it has not been demanded by HMRC, please contact us, as it will be necessary to ensure that it is not inadvertently repaid by HMRC.

The failure of HMRC’s systems to generate Payments on Account has occurred in previous years but is much more widespread this year. In previous years the problem was rectified before 31st January but for reasons that are currently unclear this has not happened this year.

The Institute of Chartered Accountants in England and Wales and the other professional bodies have made representations to HMRC on this issue. They are concerned that (a) Self-Assessment receipts for the Exchequer in January and July 2019 will be lower than they should be and (b) higher than expected Self-Assessment tax demands in January 2020 may result in some taxpayers getting into debt. 

In summary, the first 2018/19 Payment on Account (due 31st January 2019) may be repaid and the second 2018/19 Payment on Account may not be demanded 31st July 2019 by HMRC.  Accordingly, these sums will probably fall due on 31st January 2020 (together with the balancing payment for 2018/19 and the first Payment on Account for 2019/20) but HMRC will not charge interest on the late payment of the 2018/19 Payments on Account.  Clients that are affected need to take great care to set aside sufficient funds for the liabilities due in January 2020.

Malcolm Lofts F.C.A: 7th Mar 2019 08:47:00