Taxpayers in doubt over self assessment statements following HMRC IT error
An accounting and advisory firm has issued a warning to taxpayers, explaining that they may receive unexpected tax bills due to a technical error with HMRC’s IT system.
While 31 July is the last day for taxpayers to correct mistakes they may have made on their self assessment tax returns, they have not been notified that they have outstanding tax liabilities due to an IT error, accounting and tax advisory firm Blick Rothenberg has warned.
HMRC has issued self assessment statements to individual taxpayers which do not show their second payment due to be paid by this Wednesday, 31 July. This is causing confusion and might result in large unexpected payments and interest charges, Blick Rothenberg has said.
“This is a total fiasco, and the issue first arose in January when people were required to make their first payment on account,” said Nimesh Shah a partner at the firm.
“Due to a system error, HMRC had not generated payments on account for 2018/19 for some taxpayers. A number of statements have been issued by HMRC that do not show anything actually due on 31 July 2019," he added.
Mr Shah said that HMRC is aware of the issue but has not corrected it, despite it being a known problem for six months.
"If a person has received a statement, which does not look correct, and does not include a second payment, which they feel is due, they should contact HMRC immediately. Similarly, you may not receive a statement at all, and so it’s worth double-checking."
HMRC has confirmed that it will not apply late payment interest if a payment was due but was not visible on systems. However, recent data has shown that just 14 per cent of fines for late payment of self-assessment tax bills were cancelled by the office last year, down from the 16 per cent and 18 per cent in the two years previously.
Earlier this month, accountancy firm Moore Stephens suggested that HMRC is becoming less sympathetic to taxpayers and may be narrowing the grounds for what it considers to be a ‘reasonable excuse’ for late payments.
"Individuals have to either discuss the correct course with their accountant or follow-up with HMRC to confirm exactly what they should be doing," Mr Shah advised.
He warned that those who choose to refer to HMRC’s statements and not make their second payment on account, are likely to have a much bigger tax payment in January 2020.
"HMRC will want their full 2018/19 tax liability, as well as the first payment on account for 2019/20.
"It’s therefore important to keep the money to one side," Mr Shah concluded.