Paying HMRC for different Tax Years

Absolute80s

Hi

My husband owes £30,000 to HMRC for failing to submit Tax Returns for four years (pre 2020). This figure is made up of tax, late filing fees and interest. He believed his accountant had submitted the returns (accountant now deceased, so no comeback there). 

He has tried to re submit the relevant tax returns, but the deadline for this has passed. My husband is currently appealing this amount and is awaiting further response from HMRC.

He has new accountant and has since submitted tax returns for the latest 4 years.  

The problem is that when he pays his tax bill, the amount paid comes off the overall debt, and he is charged a late filing penalty and interest for the current tax year.

Is it possible to apportion payment to a specific tax year?

His accountant has suggested he pays it and waits until the outcome of the appeal, but this means the interest will continue to rack up.

He is not on low income so Tax Aid would not be an option.

Does anyone have any experience of this kind of situation or any helpful advice.

Thanks

DRS1

He believed his accountant had submitted the returns (accountant now deceased, so no comeback there). 

What happened to the accountant's paperwork?  That must be somewhere.  Maybe the new accountant can get hold of it?

He has new accountant and has since submitted tax returns for the latest 4 years.  

The problem is that when he pays his tax bill, the amount paid comes off the overall debt, and he is charged a late filing penalty and interest for the current tax year.

Surely no late filing penalty for the current tax year (presumably you mean 23/4 which is due on Friday).  The previous years (22/3 and before) were presumably late so yes late fees and interest will be due for them

His accountant has suggested he pays it and waits until the outcome of the appeal, but this means the interest will continue to rack up.

I assume the accountant means pays everything HMRC say he owes.  If he does that surely the interest will not continue to rack up?

But are you saying the new accountant has not submitted tax returns for pre 2020?  Why not?

Hoenir

Absolute80s said:

He believed his accountant had submitted the returns (accountant now deceased, so no comeback there). 

The accountant wouldn't have paid the tax though to the HMRC. That's the responsibility of the taxpayer. Surely this alone would have raised a red flag given the number of years that have past. 

mybestattempt

DRS1 said:

He believed his accountant had submitted the returns (accountant now deceased, so no comeback there). 

What happened to the accountant's paperwork?  That must be somewhere.  Maybe the new accountant can get hold of it?

He has new accountant and has since submitted tax returns for the latest 4 years.  

The problem is that when he pays his tax bill, the amount paid comes off the overall debt, and he is charged a late filing penalty and interest for the current tax year.

Surely no late filing penalty for the current tax year (presumably you mean 23/4 which is due on Friday).  The previous years (22/3 and before) were presumably late so yes late fees and interest will be due for them

His accountant has suggested he pays it and waits until the outcome of the appeal, but this means the interest will continue to rack up.

I assume the accountant means pays everything HMRC say he owes.  If he does that surely the interest will not continue to rack up?

But are you saying the new accountant has not submitted tax returns for pre 2020?  Why not?

@DRS1

The OP has already acknowledged that the deadline for making returns for 2019/20 and earlier years has passed.

S34A TMA 1970 sets the time limit for making a self assessment return at 4 years after the end of the year of assessment:

https://www.gov.uk/hmrc-internal-manuals/self-assessment-legal-framework/salf205

@Absolute80s

There shouldn't be a late filing penalties for the 2023/24 return if it has been sumitted.

I would suggest your husband follows the advice of his new accountant and waits until the full extent of the arrears is finalised. 

Absolute80s

Thanks for your reply.

 

He believed his accountant had submitted the returns (accountant now deceased, so no comeback there). 

What happened to the accountant's paperwork?  That must be somewhere.  Maybe the new accountant can get hold of it?

 

Got the previous accountant’s paperwork and re- submitted but it was returned by HMRC saying the cut off dates had passed.

He has new accountant and has since submitted tax returns for the latest 4 years.  

 

The problem is that when he pays his tax bill, the amount paid comes off the overall debt, and he is charged a late filing penalty and interest for the current tax year.

Surely no late filing penalty for the current tax year (presumably you mean 23/4 which is due on Friday).  The previous years (22/3 and before) were presumably late so yes late fees and interest will be due for them

 

Sorry, my mistake - no late filing penalties for the returns submitted since 2020. Last years bill was £925 which he paid, but the amount got taken off the total debt, and is still accruing interest. This year’s amount is £588.  If he pays that it will come off the total amount owed, and that will accrue interest.

 

This is why I was hoping he could allocate a payment to a specific tax year.

His accountant has suggested he pays it and waits until the outcome of the appeal, but this means the interest will continue to rack up.

I assume the accountant means pays everything HMRC say he owes.  If he does that surely the interest will not continue to rack up?

 

It is lot of money to find, and he thinks if it is paid, there will be no chance of appeal success.

But are you saying the new accountant has not submitted tax returns for pre 2020?  Why not?

New accountant re- submitted pre 2020 returns but they were returned by HMRC saying the cut off dates had passed.

 

 

DRS1

Interesting that there is a four year time limit when we are always told to keep paperwork for at least 6 years if not longer.

Are HMRC attempting to tax him for years before 2020?

I am not sure if there is a way of allocating payments to specific years - the payment reference you use is for you not for any particular year and HMRC will understandably allocate payments to the oldest amounts due.   However I did find this which suggests that you can allocate payments to a specific year or liability if you do so when making the payment and perhaps you can get HMRC to reallocate them if they have allocated them to a year you didn't mean to pay.
Allocate Your Tax Payments – Before HMRC Does! – Mark McLaughlin
I hope it is not out of date.

mybestattempt

 
@Absolute80s

It seems the tax for 2019/20 and earlier years was determined by HMRC. If so, there is no right or appeal but a claim for special relief can be made:

https://www.gov.uk/hmrc-internal-manuals/self-assessment-claims-manual/sacm12220

I assume the new accountant is pursuing that with HMRC?

sheramber

HMRC recommend paying this amounts due when appealing, to prevent interest charges increasing.

Paying them  does not affect the outcome of  an appeal.

If the appeal is successful then the amount payable will recalculated and any overpayment refunded.

If the appeal is not  successful then  by paying now further increase in the amount due is avoided. 

Until the appeal is settled the interest charges will be increasing. 

DRS1

Got the previous accountant’s paperwork and re- submitted but it was returned by HMRC saying the cut off dates had passed.

I guess I was hoping the papers would include a letter to HMRC saying here is the tax return.  But maybe any correspondence with your husband might help in deciding if he was at fault in not submitting the returns - eg showing that your husband was acting reasonably in relying on the accountant to submit the returns to HMRC.  Might help in any appeal.

sheramber

Taxpayers are responsible for their tax affairs and ensuring they are up to date.

Nobody else. 

Any failure by an accountant is between the taxpayer and the accountant.

mybestattempt

DRS1 said:

Got the previous accountant’s paperwork and re- submitted but it was returned by HMRC saying the cut off dates had passed.

I guess I was hoping the papers would include a letter to HMRC saying here is the tax return.  But maybe any correspondence with your husband might help in deciding if he was at fault in not submitting the returns - eg showing that your husband was acting reasonably in relying on the accountant to submit the returns to HMRC.  Might help in any appeal.

I think this is a situation where for 2019/20 and earlier years there is no right appeal because HMRC has made determinations of tax due and the only way to get the tax charges reduced is to make a successful claim for special relief.