PT12 & 13 Payment Dates, Penalties and Further Aspects Flashcards
When is income tax paid ?
Two payments on account of income tax for the tax year are made: the first on 31 January in the relevant tax year, and the second on 31 July after the tax year. Each payment on
account is 50% of the previous year’s tax due, but only in respect of income tax, not capital gains tax.
The balancing payment is due on 31 January after the tax year.
When’s payment due?
Payment due in respect of a simple assessment is due on 31 January after the tax year.
Penalties apply where the payment is not made by the due date of 31 January after the tax year, as follows:& 13
More than 30 days late 5%
More than 5 months after first penalty Additional 5%
More than 11 months after first penalty Additional 5%
Late payments on account do not attract separate penalties.
Where penalties for late notification (where not deliberate), late filing or late payment have been correctly charged by HMRC, the taxpayer’s only grounds for appeal are that they had a ‘reasonable excuse’ for the failure
Payments on account are not required to be made where either:
a. the tax due for the previous year is less than £1,000; or
b. more than 80% of the tax liability is collected at source.
If a taxpayer believes the payments on account will be too high…
they can claim to reduce them (TMA 1970, s.59A). However, if the reduction is excessive and a balancing payment
results, interest will be charged on the excessive reduction, allocated equally to each payment on account.
Interest runs from the due date to the date of payment.
If tax is overpaid, repayment interest will be added to the repayment received from HMRC. When will it be paid?
Repayment interest will be paid on overpaid tax from the date the tax was due to be paid or the date payment was actually received, if later, to the date repayment is made.
The interest rate on overpaid tax (repayment interest) is lower than that charged on underpaid tax. The interest received is tax free.
Repayments are identified with tax paid as follows:
a. balancing payment;
b. equally to the payments on account;
c. tax deducted at source (deemed to have been paid on 31 January following the tax
year).
If an officer makes a ‘discovery’, an assessment under TMA 1970, s.29 can be raised to recover the tax.
HMRC can only raise a discovery assessment if one of which two conditions has been fulfilled?
- The loss of tax was brought about carelessly or deliberately by the taxpayer.
- When the officer ceased to be entitled to give a notice of enquiry to the taxpayer under TMA 1970, s.9A (usually 12 months from the due date for filing), he could not
have been reasonably aware, on the basis of information made available to him, that the return was incorrect or incomplete.
However, a discovery cannot be made if extensive disclosure has been made which clearly notifies HMRC of an actual insufficiency.
