ye 5/4/2021 tax £7000 - note less than 80% of tax collected at source so payments on account required
ye 5/4/2022 tax £1200 - do NOT not collect underpaid tax via coding adjust was not ticked - doh
ok ref ye 5/4/2022 payment due dates - i would have expected that £1200 would be payable split 1st payment on account 600 and second payment on acount 600 - client has paid 550 (slight shortfall at present) - hmrc have shown both payments on acount as being due but coded out the remaining £650 due (ye 5/4/24) so that the account is being shown as fully settled - despite payments on acount not having ben made. Should the computer be doing that? Must admit i can't remember the last time i had a second payment on account due submitted before july and ticked the please code out tax box - i thought the coding should only apply to the balancing payment - not the payments on account. In my defence btc didn't actively flag up anything would be coded out and that normally keeps me right.
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Is the £1,200 the additional tax due for 21-22? If so then this is coded into 23-24.
Are any POA showing as due?
the 1200 is the total 21/22 bill that i am presuming cannot be coded as they are "required payments on account"
these are showing as being due as payments on account due - but having partly been cleared by note saying coded out - note this entry is in the section where payments made are normally located - if part of bill is being transferred out to tax code i would have expected payments on acount to have been formally reduced each by the same amount.
Ref year of colletion it is defaulting to 23/24
No biggie hmrc are loking into it and will report back - i always have the option to ask them to remove the coding entry anwyway i am more curious than anything as to whether this is right - could be useful for some cash poor clients with payments on account ! we never tend to those clients tax returns before january though !
I have vague memory this may be glitch - but being over 50 i don't really belive what my brain tells me anymore.
Note a logical explanation here is that client failed the 80% of tax collected at source ye 5/4/2021 but has passed ye 5/4/2022 - so hmrc are now happy to code out sums due whreas previously using the prior latest info (ye 5/4/2021) said no. I am not aware though that hmrc revisit the past in that regard and it sort of makes mockery of must submit by end of december 80% fixed rule if they later then make allowances - its complicated enough without looking into the future or past!
I think the POA are calculated using the tax due for the year after taking account of tax to be collected through PAYE. So if the 21-22 tax is reduced to nil by https://www.gov.uk/pay-self-assessment-tax-bill/through-your-tax-code then the 22-23 POA would be nil.
Are you sure about the basic scenario?
The only thing that can determine if POA are appropriate for 2021/22 is the 2020/21 return.
So if this is correct then there cannot be POA for 2021/22.
"ye 5/4/2021 tax £7000 - note less than 80% of tax collected at source so payments on account required"
It sounds more likely that the 2020/21 return meant POA for 2021/22 were required and now the 2021/22 return has been filed the exact amount of each POA has been established, part has been paid by a credit on your clients account and the rest is going to be collected via the 2023/24 tax code.
Although not that common there is nothing that would prevent unpaid POA from being coded out.
See Conditions for transfer section of HMRC's guidance here,
https://www.gov.uk/hmrc-internal-manuals/self-assessment-manual/sam141010
Thanks for thatb Not anaonymous useful link
So if this is correct then there cannot be POA for 2021/22.
"ye 5/4/2021 tax £7000 - note less than 80% of tax collected at source so payments on account required"
I think you have read my coments the wrong way round - not enough tax was collected at source so the 80% rule was failed so payments on acount are required. If more than 80% of tax had been collected at source then there would be no payments on acount due and no issue.
"It sounds more likely that the 2020/21 return meant POA for 2021/22 were required and now the 2021/22 return has been filed the exact amount of each POA has been established, part has been paid by a credit on your clients account and the rest is going to be collected via the 2023/24 tax code."
Yes this is the case payments on account revised to match final ye liability (half each)- and yes its as you describe my only confusion is that i did not realise payments on account could actually be "settled" via tax code adjust - i "presumed" they always needed to be paid.
Cheers for linking the guidance - the wording here is nice and sketchy.
At top this seems to reference only balancing charge - which i would have defaulted to presume specifically does not include the payments on acount.
However when they provide the detail ref the balancing payment inside the brackets rather unexpectedly for me this does indeed include outstanding payments on account so - it does appear to be saying that for coding out purposes balancing charge is basically tax o/s - i think ? hey ho
Balancing payment (that is, balancing charge debit (BCD) and any outstanding payments on account (POA’s)) is £2999.99 or less (including any amounts previously transferred to PAYE for that year)
I took on another accountant's clients. He always asked for the client's liabilities to be coded out. I don't recommend it. On occasions I have seen the second Payment on Accounnt coded out but as you say, it is usually a glitch. You would assume that if the first POA was made, the second would be due.
I did see where someone asked them to code out the second one and HMRC refused.
