Self-assessment - reducing payment on account consequences

**MarillionFan** · 29 November 2010, 15:18

Some people make this contracting lark so bloody difficult for themselves.

Only ever count the first 70% of what you invoice. Never include the VAT, always leave it in the bank.

That way you know you can go up to 70% and at the end of the year you will always have cash available to pay Corporation Tax, Accountants & HMRC.

If you need a loan for some reason. Borrow it from a bank.

**Clare@InTouch** · 29 November 2010, 15:19

HMRC will simply charge you interest on what the payments on account should have been given the new level of income. The interest will run from the payment on account due dates - 31 January 2010 and 31 July 2010 - up to the actual payment date.

You could always make a further payment on account now in order to minimise any interest they charge.

**northernladuk** · 29 November 2010, 18:05

Originally posted by css_jay99 View Post

Hi,
For my (yet to be submitted) self-Assessment for financial year 2009-2010, my (jan & july) payment on account is spot on.
Spot on because I reduced it last year so I did not have to pay to much money in advance.

Well it turn out I need more money. I am already in the high rate band and have taken directors loan as well

Any way ... I need to take out a lot more cash as dividend but don’t want to show so much in the 2010-2011 SA.
This means that I will have to do some inventive accounting (don’t flame me because I'm sure a lot have done worse.. )

I haven't. Does that mean I can flame you. You are walking dodgy ground here, you do one thing, leads to another, which leads to another and then bang.. you are neck deep in tulip and you can't get out.

It is one thing getting into personal debt and getting behind with money affairs. It is a totally different thing doing it with your company. You are spending money that isn't yours. You do this 'inventive accounting' and can't make figures match when they need to so you have to do some more 'inventive accounting' to cover this up, you get too used to getting away with it and fall in to bad habits (already) and one day you wake up with hefty fines hanging over you and accused of fraud.

Try sort it out some other way that is above board.

**css_jay99** · 29 November 2010, 19:38

Originally posted by northernladuk View Post

I haven't. Does that mean I can flame you. You are walking dodgy ground here, you do one thing, leads to another, which leads to another and then bang.. you are neck deep in tulip and you can't get out.

It is one thing getting into personal debt and getting behind with money affairs. It is a totally different thing doing it with your company. You are spending money that isn't yours. You do this 'inventive accounting' and can't make figures match when they need to so you have to do some more 'inventive accounting' to cover this up, you get too used to getting away with it and fall in to bad habits (already) and one day you wake up with hefty fines hanging over you and accused of fraud.

Try sort it out some other way that is above board.

Im not sure you understand what I am trying to do.... I am not spending money that is not mine, I have money sitting in my company account, just want to make sure that my Total income for SA each year is not significantly disproportionate.
So its like a case of taking £10k in 2009/10 and another £20k in 2010/11 VS plainly taking £30k in 2010/11.

Which ever way the HMRC still gets the same tax amount cos its all at High rate of Tax .... just at different periods.

**Pondlife** · 30 November 2010, 00:04

As I read it, you are trying to declare a divvy in 09/10 having asked HMRC to reduce your payment on acc for that period. As Clare said they are likely to charge you interest on the difference and you should probably expect a higher PoA next year. I wouldn't make a habit of this but as a one off it shouldn't be too bad. IANAA etc

**css_jay99** · 1 December 2010, 17:08

cheers people

css_jay99

Self-assessment - reducing payment on account consequences