Self-employed professionals could experience tax bills twice as high as anticipated next year following a “glitch” in the self-assessment tax system.
The self-employed who don’t have 80% or more of their tax deducted at source and have annual tax bills of more than £1,000 are required to make payments on account.
The payments on account system is designed to help the self-employed community spread out the cost of their next tax bill over two payments – one by 31st January and the final payment to be made by 31st July, with any outstanding tax to be paid by the following 31st January in the form of a ‘balancing payment’.
However, a number of accountants across the UK have warned that some of their clients’ tax returns did not include the requirement for a second payment on 31st July this year due to an error in HM Revenue and Customs’ (HMRC) system.
This means that some self-employed businesses could face cash flow issues when their balancing payment in January is twice as much as they expect, to cover the lack of a second payment on account last month.
HMRC has already confirmed that those who have to pay their second payment account in January as part of their balancing payment won’t be charged interest for missing the 31st July deadline.
However, the tax authority warned that those who cannot afford to pay the full balancing payment in the New Year could face interest charges from there on in.
Some reports in the press suggest that this payment on account glitch is also hampering those who use tax rebates to offset such payments.
An HMRC spokesman said: “We are aware of an issue with payment reminders for a small number of customers.
“Anyone who is affected can contact us and we’ll put it right. Nobody will be charged additional interest due to this problem, as long as they pay the full amount due by 31st January 2020.”
Don’t forget at TaxAssist Accountants Wimbledon we can help you with your self-assessment obligations and liaise with HMRC on your behalf regarding any payment on account issues.
For a fixed competitive price, let us take the worry away of self-assessment, allowing you to focus on doing what you do best – running your business.
Arrange a free initial consultation on your payments on account situation by calling our friendly, experienced team today on 0800 0523 555 or drop us a line using our online enquiry form.