Interest charges for payments on account.

nkd_2

Hi all

This has been my first year of receiving the dreaded tax bill from self employment and it was a little bit of a shock to see that the inland revenue wanted me to pay up front for tax year 07/08.

What I was wondering is if anyone can tell me whether you can be charged interest if you do not meet the payment on account monies due?

It seems unethical to be able to charge interest for something that is being paid in advance.

fengirl_2

You are not really paying in advance as you will already have had some earnings by the time 31 Jan arrives - think of the people on PAYE who pay their tax at source monthly or weekly.
If you think you will not have a tax liability for 07-08, you can always request a deferral, but if it ends up that you need to pay tax, then interest will be chaged.

nkd_2

HI Fengirl

I hear what you are saying but i still think of it as paying in advance as we dont have to file those returns till next jan (09).

As for those poor people who pay tax on PAYE as you call em, I dont think they are poor people, they dont have the stresses and anxiety that goes hand in hand with running your own business. they are guaranteed a stable income so the points you made irked me a little.

However, you answered my question so for that I thank you kindly!!

Hoddie_2

As for those poor people who pay tax on PAYE as you call em, I dont think they are poor people, they dont have the stresses and anxiety that goes hand in hand with running your own business. they are guaranteed a stable income so the points you made irked me a little.

Hark at her!! As if it's ever that clear cut. I am both employed and self-employed and my employment is by far the more stressful of the two.

Mikeyorks

nkd wrote: »

What I was wondering is if anyone can tell me whether you can be charged interest if you do not meet the payment on account monies due?

For the 1st payment on account + balancing payment (due 31/1) you will be charged (daily) at the current rate .. which is 7.5% (from early Jan .... it does fluctuate with BofE base rate). The 2nd payment on account (due 31/7) is identical in interest terms.

Also there is a 5% surcharge levied on all sums outstanding over one month from the due date. Unless you have agreed a payment plan with HMRC prior to the due date.

HMRC (your final point, on the injustice) will make the point this is not a penalty - but is to put you in the same position as those who pay their dues on or before (and a quite startling number do that) the due date.

Hoddie_2

No surcharge on the POA until 28 days after the final payment date for the year in question. POA for 07-08 won't attract 5% surcharge unless they remain outstanding at 28/2/2009.

Mikeyorks

Hoddie wrote: »

No surcharge on the POA until 28 days after the final payment date

Apologies - you're quite right. Put the surcharge bit in as an afterthought - and didn't read it back to the first para.

Hoddie_2

Given all the different deadlines and dates relating to Self Assessment, I'm amazed anyone ever manages to navigate the system at all. Every time I need to work out a date I generally have to sit and think about it for a while before committing!

I added a thanks to your last message to take you off the dreaded 'thanked 666 times'...!

Mikeyorks

Yes - somehow the old Schedule 'D' system was a little more serene. SA appears, like birthdays as one gets older, to be far more than an annual event.

Hadn't noticed the number of thanks .. but grateful of the offered electronic crucifix (garlic and wooden stakes is something else? )