Charged interest on 2013-14 tax year?

techno12

I've just done my online tax return now, and I see they've added on 2 chunks of interest

eg "Accruing late payment interest for first payment on account due 31 Jan 2014"

Why is this? When submitting my return for 12/13 I put 0 for "payment on account" going forward for the 13/14 tax year (due to a huge drop in income at that point in time) and I'd assumed that this was accepted. Now it seems it wasn't and they've been charging me all this time without telling me.

Is this usual, or have I somehow made a bo-boo in my tax return?

Cheers!

zygurat789

techno12 wrote: »

I've just done my online tax return now, and I see they've added on 2 chunks of interest

eg "Accruing late payment interest for first payment on account due 31 Jan 2014"

Why is this? When submitting my return for 12/13 I put 0 for "payment on account" going forward for the 13/14 tax year (due to a huge drop in income at that point in time) and I'd assumed that this was accepted. Now it seems it wasn't and they've been charging me all this time without telling me.

Is this usual, or have I somehow made a bo-boo in my tax return?

Cheers!

This is SELF assessment, of course they accepted it.
However huge the drop in income it would appear that you should (wuith the benefit of hindsight) still have made a payment on account. You didn't so they charge you interest. Them's the rules.

purdyoaten

In reality process will accept any amendment to you POA - what will you be doing this year? Just be thankful that HMRC don't take a dimmer view than just charge interest

http://www.hmrc.gov.uk/manuals/emmanual/em4660.htm

techno12

Aye after waiting in the queue for 20mins I gave up and will pay it. Thinking about it it does make sense, though I've always set the "on account" amount to 0 in previous years and never been charged.

Looks like I haven't "won out" by earning interest on that amount after all!

purdyoaten

techno12 wrote: »

Thinking about it it does make sense, though I've always set the "on account" amount to 0 in previous years and never been charged.

Looks like I haven't "won out" by earning interest on that amount after all!

I think that you can consider yourself very fortunate that you were not 'picked up' - you could still be for 2013/14! Let's hope not.

techno12

Aye - I'm new to this (3rd tax return) and assumed that because I'd gave a reason for setting it to 0 it was accepted as they never got back to me. You live and learn..

techno12

I've just dug out my 12/13 return to see what reason I gave for putting 0 for payment on account.

"Payments on account - explain why you are making a claim
I have had zero income between 07/08/12 and 15/09/13. I'm now doing some more paid contract work, and thus would
prefer to pay my 13/14 tax bill in one go this time next year."

Now, as I heard nothing back I assumed that the claim was accepted so feeling a bit miffed that it wasn't and they didn't inform me. Fair enough I'd have paid it to avoid the interest but they should have let me know.

purdyoaten

You really have not got both points.

1. HMRC do not scrutinise and 'accept' the claim to reduce. They ask for a reason in order to establish whether the claim was inappropriate or negligent when it is found that one should not have reduced the amounts to the level requested - as you did.

2. You reduced your POA to NIL. The only reason that this would prove correct would be if your 2013/14 WAS NIL. It was not. There is no such thing as an option or preference to 'pay in one go' next year.

mgdavid

If you owe the tax and don't pay when HMRC want it, then you will pay interest. You must have earned the money to have the tax due...

TheCyclingProgrammer

As above, it's not down to you to decide whether you want to pay your tax bill late or on time. The reason for payments on account is so you pay tax not too long after the period that it relates too. In other words, the tax for the first half of the 2013/14 tax year (Apr 13 to Oct 13) was due at the end of Jan 14, not one year later just because you wanted to, hence you've been charged interest.

HMRC can only estimate your tax bill based on the previous years earnings so you have the option to reduce them if you anticipate the tax to be lower, not just because you feel like not paying on account.

Put your tax aside as you earn it and you'll never have a problem.

techno12

mgdavid wrote: »

If you owe the tax and don't pay when HMRC want it, then you will pay interest. You must have earned the money to have the tax due...

Yes, but the online return has a section at the end where you can change it and select one of 5 options as to why (and give additional info, which I quoted above). It implies it's ok to amend the amount to any figure you want, which led me to believe it's fine as the whole process is self-assessment anyway. I'm not psychic and don't know what the amount will be, so I set it to zero, thinking I could settle the whole thing as a balancing payment the following Jan (ie today).

Anyway, I've paid the whopping full amount, including payment on account for the 14/15 tax year (which will be a gross over-estimation based on my earnings so far this tax year, but I don't want to take the chance of surprise retrospective interest being applied again).

I've learned something today though - thanks for the replies!