Allocation of payments by HMRC

stillworking

Hi all, and apologies for any incorrectness as this is my first post.

I have been self employed for several years and consequently complete self assessments via an Accountant. As with most, the past few years have been tough and this did lead to arrears with HMRC. However, I have been making regular monthly payments via d/d for the past 12 months and am almost up to date. When funds allowed I have also been making one-off payments and this is the issue - I would go online to check the status of money owing - e.g. year 2009 showed an outstanding balance of £2300.00 - so I paid £2300.00. HMRC then decide to allocate part payments to several different years. This results in the year 2009 still having an outstanding balance and consequently they decide to charge a further penalty for the outstanding balance on this particular year. This has happened several times and it seems immoral that HMRC decide where the payments are allocated to their advantage just so they can make further penalty/interest charges.

Any help/advice please

Tinker009

I would suggest that you get your accountant to work out which tax years the one-off payment should be allocated to in order to mitigate the interest and surcharges (per your email this seems to be to the 2009 year). You or your accountant should then call HMRC and ask for the payments to be reallocated to 2009 and they should be able to do this.

antonic

When you make payment you MUST specify to which year payment is to be allocated (as said by Tinker).

Or as you have discovered they will be allocated anywhere.

kitty1801

Sorry, but the above comments are slightly misleading. You cannot tell HMRC where the payment should be allocated. All payments should be automatically allocated to the oldest debt first (thus REDUCING your liability to interest/surcharges) this method is fairest and is in your benefit.

If, by some strange glitch, the payments have not been allocated to the oldest debt first, then you can ask HMRC to re-allocate for you. This is the only time payments can be re-allocated.

Remember, it doesn't always relate to the tax years in order, but the date the payment(s) were due to be made.