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Can HMRC withold repayment of the July 2020 PoA?

19/20 SA100 shows Jan PoA was too much, but instead of repaying full amount, they witheld July PoA.

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We recently submitted a client's 2019/20 tax return showing that the total liability was £2,557.50, meaning the recalculated payments on account for January and July should be £1,278.75.  Our client paid £4,609.20 in January, as per the 2018/2019 SA100, but instead of refunding the full £3,3330.45. they have witheld £1,278.75 against a payment not due until the end of July.

With everything else going on, and Self Assessment taxpayers being able to defer their payments due 31st July, surely this is just wrong?

And yes, I've tried speaking to someone at HMRC - if anyone has a number that might get answered, that would be much appreciated!

Replies (7)

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By johngroganjga
02nd Jun 2020 11:36

Does it matter for £1,278.75 for two months?

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Replying to johngroganjga:
By Southwestbeancounter
02nd Jun 2020 15:18


Does it matter for £1,278.75 for two months?

Maybe not, but it could be 8 months though.
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By lesley.barnes
02nd Jun 2020 12:08

I think the issue is that the tax payer isn't being the option to defer July's payment until Jan 2021.

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By Cheshire
02nd Jun 2020 12:09

Its a lot of faff for the amount but couldbe crucial to some, so try the agent number at 8am. Never had an issue getting through then.

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By richard thomas
02nd Jun 2020 17:05

What they have done is quite wrong. Section 59A(5) TMA requires that when a payment on account is reduced "there shall be made all such adjustments, whether by repayment ... or otherwise" as may be required to give effect to whichever subsection of s 59AA applies to reduce the PoA, probably (4).

The only way of truly giving effect to the subsection (4) is to repay the £3,330.45. Keeping some back to meet the next PoA is not giving effect to ss (4) in relation to to the first PoA already paid.

It may be that HMRC consider they are exercising a right to set off under s 130 FA 2008. If so they need to referred to DMBM700010:

"HMRC has for many years set off repayments against outstanding debts within computer systems and between tax and National Insurance Contributions. The judgment of Walker L J in the case of Mellham v Burton [2006UKHL6] confirmed that set-off is a normal business principle.

S130 FA2008 gives HMRC the power, with effect from 21 July 2008, to set-off amounts that are due to be repaid to a person against debts owed to HMRC by that person, including contract settlements."

PoA 2 is not owed to HMRC, nor is it an outstanding debt.

Trouble is that I can see no right of appeal to the FTT against the HMRC action.

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By spilly
02nd Jun 2020 18:06

Is there not the ability to defer the July payment at the moment?
Or is this not applicable in the client’s case?
Sorry, just re-read your post and you have already picked that point up.
Letter to an MP from the client?

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By richard thomas
04th Jun 2020 11:51

And the point needs to be made to HMRC that by their actions they are preventing the client from exercising his right to defer the second PoA because they have effectively made him pay it now. They are then going completely against the Government's policy of "Support for businesses and self-employed people during coronavirus" set out on HMRC's website.

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