I am sure that a similar question has arisen previously (I'm even reasonably certain that Euan provided the answer), but I have been unable to find it via the search facility.
Apologies for raising it again.
£6K was paid on a/c to HMRC in May 2007 in anticipation of the liability arising from the (late) 05/06 TR. In fact, the 05/06 TR was not submitted to HMRC until Feb. 2011, along with the TR's for subsequent years.
HMRC did not initially process the 05/06 TR and allocated the £6K payment against the liabilities for later years. The 05/06 TR has finally been processed and interest is being charged, and is still accruing, on the unpaid liability for that year. The interest would be considerably reduced if the £6K paid in May 2007 was allocated against the 05/06 liability instead of against liabilities which became due some years later. A call to HMRC asking them to re-allocate the £6K payment proved fruitless, the response being that "the payment cannot be re-allocated because it has been utilised against SA liabilities which were already on the system before the 05/06 liability appeared".
I was under the impression that a taxpayer could request (retrospectively in this case) that a payment could be allocated in accordance with his/her wishes, particularly if this created a more equitable result (i.e. a lower overall interest charge), but I have been unable to find any confirmation of this in the HMRC manuals.
Any guidance on this issue would be greatly appreciated.
Thank you.
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Replies (4)
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Payment allocation
I had a situation where I had so submit 5 years of tax returns in one go (a doctor).
The returns were all sent at the same time to the officer handling the case, but HMRC processed them in a random order and allocated payments made to the returns that were processed first. This led to the same situation as you describe.
I rang the officer handling the case and asked for the payments to reallocated as the current allocation was distorting the interest due. I seem to remember telling the officer it was not the tax payers fault that HMRC processed the returns in a random order.
The payments were reallocated in this case.
HMRC are supposed to cover oldest debts first, due to interest.
You certainly have a right to request that the payments on the statement are reallocated. I would write to the office as the contact centre staff probably don't even know this is possible!
Indeed
...and they are saying that they did with what was on the system at the time of the payment.HMRC are supposed to cover oldest debts first, due to interest.
You certainly have a right to request that the payments on the statement are reallocated. I would write to the office as the contact centre staff probably don't even know this is possible!
I seem to recall that if you wanted a particular payment allocated to a specific liability it was necessary to specify this when making the payment - difficult if you are paying electronically.
Certainly worth another go though I should have thought.
Accounts Office
The call centre staff can't do it even if you get lucky and find one that knows the rules and agrees with you! When I need to do it for a client I just phone the Accounts Office in Cumbernauld who know what I'm taking about and can sort it out. But check here for your clients own circumstances to see if you can request the re-allocation http://www.hmrc.gov.uk/manuals/dmbmanual/dmbm210120.htm