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HMRC chasing late payments on account

How aggressive are HMRC with chasing payments on account

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Client has received several letters from HMRC chasing payments on account for 20/21 due in January and July 2021.

My understanding is that he will only be charged interest on these late payments and will only get charged a penalty if these payments and any balancing charge are not paid by 28th February 2022. 

Would HMRC do anything more aggressive than just send out reminders until the end of February or have they been known to chase late payments on account with a bigger stick that just a reminder letter?

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By johngroganjga
27th Oct 2021 19:58

What is the purpose of your question? Presumably you have advised your client to pay, but he hasn’t. What were you and he expecting other than that HMRC would chase for the unpaid tax to be paid? Why hasn’t your client paid?

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By Paul Crowley
27th Oct 2021 21:08

If not liable, postpone it
If due pay it
Client should now know the liability if he is going to be able to cope with MTD

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ALISK
By atleastisoundknowledgable...
28th Oct 2021 00:36

My understanding matches yours

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By Paul D Utherone
28th Oct 2021 10:05

Quantum can come into it. For larger sums they are likely to also chase by phone.

As Paul says: if it's due pay it, if it's not then make a claim to reduce

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By Justin Bryant
28th Oct 2021 11:05

I think someone here mentioned recently that a debtor's prison type system still potentially operates for (non-evasion or otherwise non-fraudulent) tax debts, but I'm far from convinced (in practice at least).

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Replying to Justin Bryant:
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By richard thomas
28th Oct 2021 14:40

The someone was me. I agree that it is not used in practice.

An interesting question is how HMRC enforce payment of a PoA. A previous thread discussed whether a PoA was income tax, and my view is that it wasn't, a position reinforced by legislation which specifically treats a PoA as tax for some purposes.

Those purposes do not include anything in Part 6 TMA, ie suing for a debt in the Mags Ct, County Ct or High Court (or Scottish & NI equivalents) or distraining. Bankruptcy proceedings might be possible but I would have thought highly unlikely given that the unpaid PoA becomes an income tax debt on 31 January.

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By justsotax
28th Oct 2021 11:04

Whilst they can chase all they like, I am not sure if it is a legally enforceable debt, as it is after all only an estimate of tax that may in the event not be due.

Its a shame they aren't as hot when they come to dealing with their post....or queries...or complaints....or returning calls when they say they are going to.....

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By arthurallan
28th Oct 2021 11:54

The client has got into a bit of a pickle financially and is just trying to prioritise his debts between the ones most likely to be chased hard and cause a problem and the ones less likely to come on to him in a heavy manner.

He knows the amounts that are currently owed and the payments on account for 20/21 look about right so no dispute about the amounts.

These payments on account are, however, just estimates of a final tax liability due on 31st January 2022. So my understanding is that HMRC would not be able to take legal action to enforce the debt.

I was really just asking if anyone had any experience of how HMRC deal with this in practice in the event that the tax payer held off from paying his tax liability (if he can) in January. Whether they would do any more than charge interest.

Of course if the tax payer has a liability he should meet that obligation but life isn't always as straightforward as that for everyone

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Replying to arthurallan:
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By Hugo Fair
28th Oct 2021 12:23

"in the event that the tax payer held off from paying his tax liability (if he can) in January"
Did you mean 'until January' (i.e. ignoring the POAs but settling his actual tax liability in time)?
Or are you now asking about impact of not paying his final tax liability by the Jan deadline?

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Replying to arthurallan:
Lisa Thomas
By Lisa Thomas
29th Oct 2021 09:14

Sounds as if the client might be insolvent, so they should take great care to not illegally prefer some creditors over others as this could come back to bit them personally, should the company end up in Liquidation.

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Replying to Insolvency Practitioner:
By JCresswellTax
29th Oct 2021 10:17

Who mentioned a company? Where does liquidation come into it?

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Replying to JCresswellTax:
Lisa Thomas
By Lisa Thomas
29th Oct 2021 10:22

Apologies, I had my Corporate hat on when I read the post. It's been a long week...

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By arthurallan
28th Oct 2021 12:58

Question is about payments on account only. Client knows the full tax liability for 20/21 needs to be settled ideally by January 31st 2022 or February 28th at the latest to avoid late payment penalties. The query is really does anyone have experience of HMRC doing anything more aggressive than reminder letters and interest charges on late payments on account

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Replying to arthurallan:
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By richard thomas
28th Oct 2021 14:41

2nd March to avoid penalties as its a 30 day period from due date (so 3 March in a leap year).

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