Making a late payment on account to HMRC

Jinos

Hello all,

I wonder if anyone has had experience of asking HMRC for extra time to pay their payment on account, or of simply paying it late without advance warning?

I should be able to pay the balancing payment due for my tax from self-employment for 2010-2011 by the deadline of Jan 31, but due to my invoices not being paid quickly I won't be able to pay the first payment on account until the end of February, or possibly March. (Turnover for 2011-2012 will probably be about the same so I can't ask for a reduction of payment on account.)

I understand there will be an interest charge, but no surcharges on late payments on account, but do I have to ring up HMRC to warn them that I will be late paying? I'm really useless on the phone and get tongue-tied so would prefer to avoid speaking to anyone about it if possible! If the balancing payment had been made, would they start chasing immediately for the payment on account? Would it mean I'd be 'flagged up' for possible further investigation?!

Thanks in advance for any advice!
Jinos

antonic

Read here for more info

http://www.hmrc.gov.uk/payinghmrc/problems/cantpay.htm

If you tell them in advance they will be more sympathetic than if you stick your head in the sand and ignore it.

chrismac1

Antonic is correct. As usual, I have a number of clients calling up the Time To Pay line right now. If you leave it until February you are a late payer not someone acting proactively in time to tell them of a problem before the deadline.

One other thing - make sure the payment on account is correct. As an example, earlier today I finished off the August 2011 accounts of a sole trader who knew he'd had a bad year. His PoA based on 50% of the August 2010 accounts would have been £1,500. His PoA based on 50% of his 2011 accounts is just £35. This is one reason I call up every business client at least once a quarter, the last thing cash-strapped business owners need to be doing is handing across £1,500 in tax they don't need to pay!

Important - this facility if abused will in the end cause a lot of trouble for you with HMRC. So in the example I quoted if we put in the £35 and then in April I file his 2011-12 tax return and it shows £3k as the tax and NI liability, all we'll have achieved is flagging up to HMRC that my client is a bit dodgy and that maybe I am too.

Mikeyorks

Jinos wrote: »

If the balancing payment had been made, would they start chasing immediately for the payment on account? Would it mean I'd be 'flagged up' for possible further investigation?!

No - to both of those. Unless your POA runs to many £thousands.
As long as you do it late Feb / early March - only the interest to worry about.

Mikeyorks

chrismac1 wrote: »

As usual, I have a number of clients calling up the Time To Pay line right now. If you leave it until February you are a late payer not someone acting proactively in time to tell them of a problem before the deadline.

The OP has made it quite clear he is better informed than most by his differential of the balancing payment and the POA interest / surcharge regime.

HMRC do not chase SA underpayments up to the Surcharge date unless they're very significant. They don't chase POAs up to that date unless they're even more significant. So cluttering the TTP line for an outstanding POA and which will be paid by end Feb(ish) doesn't make a whole lot of sense.

Very different if it includes a balancing payment element as the TTP arrangement obviates the Surcharge.

Jinos

Hello all,

Many thanks for your replies. Thanks Antonic for the HMRC link, I had seen that but it seems to only be advising about problems when paying balancing payments, not just the payments on account.

Cheers chrismac1 too, my income this tax year will, if anything be higher than last, so I won't be asking to reduce the POA!

Very interesting points Mikeyorks, many thanks for your thoughts on this. It's a cash flow problem, it's not as if I'm trying to not pay any tax due, so, as you say, as long as the balancing payment is made and the POA is paid pretty quickly (and won't be many thousands, 3k at most!) then I'm hoping that if I don't pluck up the courage to ring them then I'll just see an unpaid bill online for a bit until it's all paid off... !:)

Thanks again
Jinos

sarahk100574

I know of several small businesses that do not pay their poa's on time - ever! They only get chased if they haven't cleared the balance within 3 or 4 months, and the interest charged is a lot cheaper than overdrafts/credit cards etc.
I have one client co at the mo that is behind on paye by about two years and hardly ever even receives a letter, (paying arrears slowly and ad-hoc) but I have another client that is 2 months behind and is being visted weekly in the offices. (Basically its all a bit hit and miss with how they will treat late payments imho!)