HMRC glitch. This year there is an error in HMRC’s systems which means that some self-assessment (SA) accounts are showing that the payments on account for 2018/19 are not due. If this applies to your clients their account should show a credit for the first payment of account. HMRC has confirmed that if you/your client do not receive a statement of account letter during June or July, payments on account have not been created in its systems and you do not need to do anything about it. The 2018/19 tax liability will instead be due in full by 31 January 2020 and HMRC will not charge late payment interest.
Bad luck for some. However, if payments on account were created (for example if you contacted HMRC and asked for the payments to be set up) then the second payment on account is due by 31 July 2019 and interest will be charged on late payments.
What action can you take? It would be sensible to check your clients’ SA accounts online before advising them to make the second payment on account next month. If a payment is not due then you do not need to correct it and can tell your client to enjoy the cash flow benefit for six months.
Tip. Use this touch point with your client to encourage them to provide their tax return information earlier this year so they know for certain how much is due in January 2020.
As the first payment on account is not due, technically this should be repayable, however, HMRC’s communication is silent on the matter. Where an SA account is in credit, HMRC has been known to sporadically make repayments to individuals. You should therefore monitor your client’s SA account closely and ensure their address details are up to date. Remember that any refund of the first payment on account, whether you ask for it or not may have to be repaid to HMRC by 31 January 2020.
If any of your clients would prefer to make payments on account you can call HMRC on 0300 200 3311 and insist that it sets up 2018/19 payments on account for that particular client.
Tip. Do not overlook new clients or clients that you do not have a 64-8 for.
HMRC’s agent update can be found here https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/807912/Agent_Update_72.pdf