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Payment on account

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    Payment on account

    I have filled in my tax return for 2014-15, which consists of a PAYE sum from a permie role, about £37,000, plus a dividend of ~£12,500 from my ltd company which ceased trading in July 2015 (PAYE was taken in the previous tax year). Anyway, the calculation says I owe £1,800 for the dividend, and then tries to charge me the same again as a payment on account due in two equal payments on 31 Jan and 31 July 2016. Having spoken with HMRC, this means they assume I will receive another identical dividend this year, which is not the case.

    Do I just file the tax return, and say the payment on account is zero? When I rang HMRC they seemed to think there might still be a payment on account, for which I would be fined if I said it was zero. I tried to find out how a PoA could arise, but I find HMRC staff talk a dialect of English that is not easy to follow. They advised me to file the tax return, not say the PoA is zero, wait 3 days, then ring HMRC to examine my return and adjust the PoA as required. My concern is doing so might encourage them to take an extra close look at my return, and query the dividend, which would then be a real pain in the posterior.

    I am tempted to file the return and say the PoA is zero since I will receive no dividends this year apart from ~£100 from a unit trust I hold. Is this wise?

    Thanks

    #2
    Yes, you can reduce or eliminate them:

    https://www.gov.uk/understand-self-a...nts-on-account

    If you do so incorrectly, you will pay interest on the POA from when it should've been due (apparently not applicable in your case).

    Comment


      #3
      The problem I had when speaking with HMRC was trying to find out what could give rise to a payment on account for 2015-16 since the 2014-15 dividend was a one off. I'm pretty sure I am okay to just reduce the PoA to zero but I'm asking here to be safe.

      Comment


        #4
        Originally posted by GoodBytes View Post
        The problem I had when speaking with HMRC was trying to find out what could give rise to a payment on account for 2015-16 since the 2014-15 dividend was a one off. I'm pretty sure I am okay to just reduce the PoA to zero but I'm asking here to be safe.
        Not sure I follow. Only you know your income streams and whether self-assessment will be needed and a POA required. I believe the threshold is 1k in tax owed for a POA. If you've ceased trading, it's unlikely that you'd have a liability gong forward. Hence, you should be able to file an SA303 and reduce the POA to zero.

        Comment


          #5
          Originally posted by jamesbrown View Post
          Not sure I follow. Only you know your income streams and whether self-assessment will be needed and a POA required. I believe the threshold is 1k in tax owed for a POA. If you've ceased trading, it's unlikely that you'd have a liability gong forward. Hence, you should be able to file an SA303 and reduce the POA to zero.
          The problem is that I am not an accountant, and do not understand what gives rise to a PoA. I tried to find out from HMRC without success. I did manage to squeeze out of them that a permie job does not generate a PoA. For 2015-16 my only employment will be two consecutive permie roles since I am now changing jobs. There will be no contracts, and no company dividends. You have confirmed my beliefs. Thanks.

          Comment


            #6
            Originally posted by GoodBytes View Post
            The problem is that I am not an accountant, and do not understand what gives rise to a PoA. I tried to find out from HMRC without success. I did manage to squeeze out of them that a permie job does not generate a PoA. For 2015-16 my only employment will be two consecutive permie roles since I am now changing jobs. There will be no contracts, and no company dividends. You have confirmed my beliefs. Thanks.
            Oh, I see. Nothing you mention will give rise to a POA. The liability arises when you are self-assessed to income tax in the prior year and the liability exceeds a certain threshold.

            Comment


              #7
              Originally posted by GoodBytes View Post
              The problem I had when speaking with HMRC was trying to find out what could give rise to a payment on account for 2015-16 since the 2014-15 dividend was a one off. I'm pretty sure I am okay to just reduce the PoA to zero but I'm asking here to be safe.
              Asking on here does not make you safe. You get a second opinion from a bunch of contractors based on some very sketchy facts.
              'CUK forum personality of 2011 - Winner - Yes really!!!!

              Comment


                #8
                Originally posted by northernladuk View Post
                Asking on here does not make you safe. You get a second opinion from a bunch of contractors based on some very sketchy facts.
                Plus a few accountants...but they're all busy skiing on our monthly fees.

                Comment


                  #9
                  Originally posted by northernladuk View Post
                  Asking on here does not make you safe. You get a second opinion from a bunch of contractors based on some very sketchy facts.
                  Well, a second opinion. The facts are not sketchy, that's all there is.

                  Comment


                    #10
                    If you are certain you will have no additional tax to pay for 2015/16 then you can safely reduce your payments on account to zero.

                    If you get it wrong and do end up owing some tax, you will also owe interest from when they should have been paid on account. There is no fine that I'm aware of (though HMRC would probably take an interest in somebody who routinely abused this facility).

                    Comment

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