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?
Replies (14)
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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?
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
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
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).
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.
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.....
"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?
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.
2nd March to avoid penalties as its a 30 day period from due date (so 3 March in a leap year).