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Payments on account

Taxfiler say yes; HMRC say no

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Client has 2020/21 income of £19k from employment with £1,500 tax deducted plus £7k from self employment. Total tax bill £2,700 plus class 2 for part of the year.

I duly worked out payments on account (as did Taxfiler) but HMRC disagree and say they are not due. To be fair they also fined this client for late filing of a fictitious paper return even though it was filed on time via Taxfiler so I suspect the POA error to be theirs too.

£1,500 is not 80% of £2,700 so what am I missing?

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By rmillaree
09th Jun 2022 09:28

I do like a good payment on account mystery.

The most obvious explanation would be any "temporary" removal from sa for ye
5/4/2022. Most common reason for vanishing payments on account is where hmrc rightly or wrong remove client from sa for that following year - if that happens payments on account are never reinstated even if hmrc agree that the removal from sa was their fault and should never have happened.

Could it perhaps be that the fictitious paper return was nothing of the sort and simply hmrc incorrectly closing the sa record and processing nil return for 2021 with knock on consequence of the ye 5/4/2022 records also having been closed temporarily?

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Replying to rmillaree:
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By legerman
09th Jun 2022 10:25

rmillaree wrote:

I do like a good payment on account mystery.

The most obvious explanation would be any "temporary" removal from sa for ye
5/4/2022. Most common reason for vanishing payments on account is where hmrc rightly or wrong remove client from sa for that following year - if that happens payments on account are never reinstated even if hmrc agree that the removal from sa was their fault and should never have happened.

Could it perhaps be that the fictitious paper return was nothing of the sort and simply hmrc incorrectly closing the sa record and processing nil return for 2021 with knock on consequence of the ye 5/4/2022 records also having been closed temporarily?

Yes, this happened with one of my clients recently. 2 partnerships created by mistake for the same client, guy at HMRC cancelled one but treated it as a a paper return submitted 28th April to clear it. This kicked in daily penalties from 1st February but fortunately I got them cancelled.

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Replying to rmillaree:
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By bettybobbymeggie
09th Jun 2022 12:08

Yes that hits the nail on the head, thanks. Client was removed from SA for 2020/21 for unknown reasons but clearly payments on account not reinstated.

Thanks for taking the time to reply!

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