Some taxpayers face unexpected tax bills due to a technical error with HMRC’s IT system which means that self assessment statements were sent out with the wrong information
Wednesday is the final payment date for taxpayers who may have made a mistake on their self assessment tax returns, but due to an IT system error at HMRC, these were not picked up by the taxman. This means that individual taxpayers were not notified of the error and so are not aware that they have an outstanding tax liability, which could be as much as £1,000.
This is causing confusion and could result in large unexpected payments and interest charges, warns accounting and tax advisory firm Blick Rothenberg. The problem arose when HMRC issued self assessment statements to individual taxpayers which did not show their second payment on account due for payment by Wednesday 31 July.
The issue was first identified in January 2019 when it became clear that HMRC systems had not always processed payments on account for 2018/19 correctly and that a number of taxpayers’ self assessment statements did not include demands for the first payment on account due in January 2019.
Unless affected taxpayers contacted HMRC to correct the position at the time, these individuals will not receive a demand in June or July for the second payment on account due by 31 July 2019.
Nimesh Shah, a partner at Blick Rothenberg, said: ‘This is a total fiasco; the issue first arose in January when people were required to make their first payment on account (due by 31 January 2019).’
He added: ‘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.
‘HMRC is aware of the issue but have 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 not showing on its systems. However, the safer approach is to make the payment due and not necessarily rely on HMRC, although this may not resolve the problem satisfactorily.
Jon Stride, co-chair of the technical steering group at the Association of Tax Technicians (ATT) warned: ‘The risk with making a voluntary payment is that there is no guarantee that HMRC will retain the tax paid.
‘Where there is no corresponding liability on the individual’s record, it is possible that HMRC’s systems will see any payments made on a voluntary basis as overpayments, and may well seek to refund the money later as part of their automated processes.’
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 as they will not have made any advance payments on account. HMRC will want the full 2018/19 tax liability, as well as the first payment on account for 2019/20. It is therefore important to keep the money to one side.
Shah said: ‘HMRC havs known about this problem for over six months now, and they have not done anything about it, and taxpayers are facing the same confusing issue again.
‘Once again, HMRC’s communication around a known problem has not been good enough and individuals have to either discuss the correct course with their accountant or follow-up with HMRC to confirm exactly what they should be doing.’
HMRC is aware of the problem and has sought to reassure taxpayers that no additional interest penalties will be charged, although taxpayers are still left in limbo.
Last month, an HMRC spokesperson told Accountancy Daily: ‘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.’
Sara White | 30 July 2019