My client could not pay their 2019/20 personal tax when due on 31 January 2021.
He knew that he would be due a repayment for 2020/21, so that return was completed quickly and submitted on 4th May 2021.
The HMRC system now shoes the correct tax position - but interest is being charged from 1 February 2021 to 31 January 2022 (which is shown as the effective date of payment). The penalties are also based on payment being made on 31 January 2022, so there is a 30 day late payment (accepted) but also a 6 months late penalty has been charged.
I thought the submission of the tax return generating the repayment would count as the payment date, as being equivalent to taking the repayment and then immediately paying it back.
Can anyone confirm if I am just wrong, if this is a change of HMRC policy, or if the HMRC system is wrong?
I have called the agent helpline who not only couldn't help, they also wouldn't refer it stating that a written appeal is required.
I did point out that if I was correct and the system is wrong they would have 7 to 9 months of corrections to deal with by the time my appeal is processed under current turnaround expectations!
The amounts are not material but I would like to know the correct position.
Thanks in advance for any help.