What will happen if I don't pay tax?

slopemaster

I filled in my self assessment form back in October. In December I received a tax demand for just over £1000, plus £500 in advance for next year.

Thing is, I reckon it should only be £700 due.
(I can't be 100% sure I'm right of course, but I'm pretty sure, as my husband's situation is v similar, and their assessment of what he has to pay agrees with what I think it should be.)

Anyway, I rung them back in December and explained this, and they said it would be passed on - but I've heard nothing. I will ring again and chase, but what happens if I can't get any response by the end of January when I'm due to pay?

I was thinking of paying the £700 and sending a letter explaining why I haven't paid the figure they asked for.

My Q is, will I get fined if I do this?

If anyone works for the Revenue, or has been in this situation themselves, I'd be grateful for the benefit of your experience.

Spidernick

The demand will be based on the entries on your tax return. Assuming you filled in this correctly then the £1,000 demand will be correct. Did you file the return on-line? If so the tax due position would have been shown once you completed all the entries on the return and filed it.

If you only pay £700 then you will pay interest on the £300 balance and the £500 payment on account from 1 February 2015 until paid. If you don't pay the £300 by 28 February 2015 then you will also incur a 5% surcharge, so £15. Not huge amounts, but personally I would pay, as you can always be refunded in the unlikely event that there is an error at the HMRC end.

suso

The crucial point is how much tax do you actually owe. As there's no indication I'll explain what happens in each of the scenarios

Scenario one, you owe just over £1000. (it must be over £1000.00 as you have referred to payments on account)

This must be paid by 31st January 2015 - You do get a bit of leeway as before any late payment penalties are raised you have 28 days to pay it. apart from a bit of interest (3% per annum) so if you paid £1000 on the 27th Feb you would have been charged about £2.50 interest)

The payment on account needs to be paid by the 31st January as well, however if you think it is too high, you can reduce it to what you think is the correct level.

If the £1000.00 isn't paid by the 27th Feb then you'll be charged a 5% late payment penalty on the amount outstanding. (so £50.00 on a balance of £1000.00)

The payment on account will attract interest of 3% per annum until cleared, but no late payment penalties.

Scenario Two
You owe £700.00
This must be paid by 31st January 2015 - You do get a bit of leeway as before any late payment charges are raised you have 28 days to pay it. If you paid £700 on the 27th Feb. there wouldn't be any interest (its too small for HMRC to care about)

If the £700 isn't paid by until after the 28 days leeway are up, then it will attract a late payment penalty of approx £35.00 (Interest would be considered to be worthwhile around about the 5th March)

If you do owe £700 then the payment on account will be cancelled.

The best advice would be - make sure you have paid at least the £700 by the end of Jan. This means that if the HMRC figure is correct, you will on be charged interest on a smaller amount / late payment penalty

If the HMRC figure is correct, pay it including the POA in order to reduce interest charges / penalties.

If your figure is correct, Pay it before Jan 31st.

Phone HMRC, (7:45 am is best) when you queried the amount due, were there any mistakes in the copy of the calculation you received that would help to identify why the amounts were different. Otherwise its likely that they will take the attitude of it tax owed based upon the figures you supplied (this is why its called self assessment)

Alternatively - post the figures up here and someone will be able to look at them.

slopemaster

Thanks so much for that detailed explanation of what happens.

I'll post up the actual issues for advice...

SavingEnthu

Hello.. also in a similar situation..

I was a Ltd Company director till 31-March-2014 (coinciding with end of tax year for which I need to submit SA).
I have since gone into a Permanent role since 01-Apr-2014

Filed in SA for 2013-14 on 11-Jan. Summary as below:

You must pay the total of any tax and class 4 NIC due for 2013-14 plus first payment on account due for 2014-15 by 31 January 2015

2013-14 balancing payment £2,678.07

1st payment on account for 2014-15 due 31 January 2015
(Note: 2nd payment of £1,339.04 due 31 July 2015)

Total due by 31 January 2015 £4,017.10

This amount does not take into account any 2013!-14 payments on account you may have already made

Question:
If I'm filing SA for 2013-14 why are they 'assuming' amounts for 2014-15? -- especially given that I am now already being taxed at source in my permanent role since Apr-2014 for the current tax year..
I am happy to pay the 2678.07... but not sure why I need to pay 1339.04 for 2014-15 now in addtion!... Mucho confuso!

Appreciate any thoughts.. Thanks in advance

zygurat789

SavingEnthu wrote: »

Question:
If I'm filing SA for 2013-14 why are they 'assuming' amounts for 2014-15? -- especially given that I am now already being taxed at source in my permanent role since Apr-2014 for the current tax year..
I am happy to pay the 2678.07... but not sure why I need to pay 1339.04 for 2014-15 now in addtion!... Mucho confuso!

Appreciate any thoughts.. Thanks in advance

Because you haven't told them that you will have no liability for that year.
You need to tell HMRC on your tax return that the income youi have declared has ceased and change the payment on account to nil.

SavingEnthu

Thanks for that zygurat789 .. I had put a note in the SA as well stating the company has ceased operations as of 31-Mar-2014..
Was planning on calling them up as well "just to confirm", and to tell them that I will only pay the £2678.07 (yikes) .. Didnt want any nasty surprises..

TheCyclingProgrammer

SavingEnthu wrote: »

Thanks for that zygurat789 .. I had put a note in the SA as well stating the company has ceased operations as of 31-Mar-2014..
Was planning on calling them up as well "just to confirm", and to tell them that I will only pay the £2678.07 (yikes) .. Didnt want any nasty surprises..

I'm pretty sure there is an online form you can submit to reduce your payments on account to nil.

HMRC will always estimate your tax for the current tax year based on what you earned in the previous year.

purdyoaten

TheCyclingProgrammer wrote: »

I'm pretty sure there is an online form you can submit to reduce your payments on account to nil.

HMRC will always estimate your tax for the current tax year based on what you earned in the previous year.

Yes - it is one of the questions asked towards the tail end of the form?

'If you are claiming to reduce your payments on account for 2014/15, put 'X' in the box.

SavingEnthu

Thanks TheCyclingProgrammer and purdyoaten .. Yep, thats exactly the Question I answered on the SA form, saying the company was now closed, and 2014-15 payments are being taxed at source by the new employer .. Appreciate the responses guys

purdyoaten

Yes - but you have to reduce each payent to Nil - not simply leave them a note