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HMRC error affects payments on account

20th June 2019

An error with HMRC's systems means some taxpayers may not receive an expected bill for payments on account next month, but will need to pay a much higher bill in January 2020.

This warning comes from the Association of Taxation Technicians (ATT), which is advising individuals affected to set aside money to pay the full bill.

Most people who complete self-assessment and have a tax bill of £1,000 or more pay their taxes in two instalments every six months, called payments on account.

These advance payments are based on the individual's tax liability for the previous year, and paid in January and July, followed by a final balancing payment the next January.

In January 2019, however, a system error meant a number of taxpayers' self-assessment statements did not include their first payment on account.

Unless those affected contacted HMRC at the time, they will not receive a bill for their second payment on account in July, and will instead be billed for the full amount of tax in January 2020.

It is possible to make a voluntary payment, but the ATT says there is a risk that HMRC will consider it an overpayment and automatically refund it.

Jon Stride, co-chair of the ATT's technical steering group, said:

"While it might be tempting to think that not receiving a tax demand is a good thing, ultimately all affected taxpayers must pay their 2018/19 bill in full by 31 January 2020.

"If a taxpayer does not make any payments on account during 2019, then their tax bill in January 2020 could be significantly larger than they are expecting."

Contact us to talk about filing a tax return.