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How to handle HMRC time to pay rejections

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Some taxpayers and advisers using the online service to defer tax due on 31 January 2021 are getting rejected. Rebecca Cave investigates what’s going wrong and how to work around any problems.

15th Jan 2021
Tax Writer Taxwriter Ltd
Columnist
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HMRC’s time to pay deferral process is in big demand this winter. Many taxpayers are facing a log-jam of tax debts due this quarter, including income tax and VAT that was automatically deferred from 2020.

The total tax payable by an individual taxpayer by 31 January 2021 will be made up of the following tax debts:

  • balancing income tax payment for 2019/20
  • second income tax payment on account for 2019/20 – deferred from July 2020
  • first income tax payment on account for 2020/21 – half of total 2019/20 liability
  • any capital gains tax for 2019/20
  • classes 2 and 4 NIC for 2019/20.

Taxpayers who are VAT registered may also have VAT liabilities that have been deferred from payment in the period 20 March to 30 June 2020, which now need to be paid by 31 March 2021. This VAT debt can be delayed further using a different online deferral system, which will open in the next few weeks.     

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Replies (5)

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By Jon Beard
18th Jan 2021 10:17

I have a client who has been told that they are not eligible for the automatic online set up process and the only tax outstanding is the deferred second payment on account that was payable 31 July 2020 - is this the reason for them being ineligible?

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By Lawrence82
18th Jan 2021 10:58

Does anyone know yet whether the SEISS grants will be subject to Class 4 NI?

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Replying to Lawrence82:
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By norstar
18th Jan 2021 15:23

Apparently yes. litrg.org.uk reported this in December: https://www.litrg.org.uk/tax-guides/coronavirus-guidance/coronavirus-sel...

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By MrsG
18th Jan 2021 11:05

With reference to the point about deferring NI, in what order does HMRC allocate payments to tax & NI?
ie if the taxpayer made POA in July but wishes to defer some or all of the payment due in January, will the NI be deemed paid or deferred?

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By norstar
18th Jan 2021 15:20

I also want to pick up this: "Be careful when postponing class 2 NIC due for 2019/20, as if that is not paid by 31 January 2021, the tax year will not count as a completed year in the taxpayer’s NIC record".

As far as I'm aware, the liability including Class 2 NI is logged against the client account and then payments set against it, but on the basis of the comment above, that would suggest someone paying their 31st Jan liability 3 days late would lose the year for state pen purposes. Doesn't seem right?

EDIT: Appears incorrect https://www.mercia-group.co.uk/media/2645/class-2-nic-complexities-1.pdf

Six years to pay?

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