There have been problems with the self-assessment system and payments on account for 2018/19 which may result in some taxpayers facing larger than usual tax bills in January 2020.

The second payment on account (POA) of income tax for 2018/19 is due by 31 July 2019. In January 2019 HMRC’s self-assessment system failed to generate POA's for 2018/19 for some taxpayers.

  • This has only been rectified where the taxpayer and/or their agent discovered the issue, contacted HMRC, and insisted on payments on account being set up.
  • Where this was not done and the first POA due in January 2019 was missing, the second payment due by 31 July 2019 will also be affected. 

Whilst this means that taxpayers who did not contact HMRC and who do not receive a statement of account in June or July 2019 do not need to make a payment by 31 July this year, the effect is that all of their 2018/19 tax will now be due in January 2020. Taxpayers not aware of this may be caught out as they will not have budgeted for their tax bill accordingly.

The ICAEW report that HMRC have said they will not create a payment record unless a payment has been made and interest charges could apply, however any payments made now will be credited against the total liability due by 31 January 2020.

Agents may wish to advise affected clients to put monies aside in preparation for a larger than usual tax bill in January, especially if they are also affected by the Loan charge.

Links to our useful guides:

2018/19 Self-Assessment Tax Return toolkit

Penalties: SA late filing, payment, notification & error

Disguised remuneration loan charge (subscriber guide)

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