People who filed tax returns through self-assessment in January 2019 are being warned about an HMRC error that may affect their second payment on account.

Some 10,833,177 taxpayers submitted tax returns for 2018/19 before the midnight deadline on 31 January 2019, with 731,836 outstanding.

That January date was also the deadline for making the first of two payments on account for 2018/19, with the second due on 31 July.

However, some taxpayers may not receive a bill for payments on account this month - and will need to make a higher balancing payment in January 2020.

HMRC systems error

An error with HMRC's systems earlier this year will mean that some taxpayers may not receive the tax demands they usually receive this month.

In January 2019, the Revenue's systems did not process every payment on account for 2018/19 correctly.

The mistake resulted in an unspecified number of taxpayers receiving statements that omitted demands for the first payment on account.

Unless those affected spotted the mistake and reached out to HMRC at the time, they will not receive a demand for the second payment on account due by 31 July.

Interest or penalties

If the latest in a long line of HMRC computer glitches affected you in January 2019, no interest will be charged on the missed payment on account.

Where interest has been charged on the first payment of account, we can liaise with the Revenue which is willing to review cases.

The only way you will be charged interest or incur penalties is if you fail to pay your 2018/19 tax bill in full by midnight on 31 January 2020.

What are your options?

Instead of welcoming the lack of an expected tax bill this summer, those affected will still need to pay a larger balancing payment for 2018/19 by 31 January 2020.

HMRC has also confirmed it will not chase you up until it sends out demands for the full amount of tax in the new year.

In light of that, the Association of Taxation Technicians (ATT) advises those individuals to set money aside to settle their 2018/19 tax bill early next year.

Jon Stride, co-chair of the ATT's technical steering group, said:

"If a taxpayer does not make any payments on account during 2019, their tax bill in January 2020 could be significantly larger than they are expecting and could come as quite a shock.

"We are concerned that taxpayers may not realise what has happened and might not set aside enough money to meet their full tax bill in one amount next January."

Risk with voluntary payments

You can make voluntary payments on account to HMRC for your July payment, and your January payment if that was also missed.

However, the ATT warns of a risk that the Revenue's automated processes will refund the tax paid.

Stride added:

"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.

"It is now too late to prevent refunds occurring by asking HMRC to reinstate payments on account for 2018/19 unless the individual voluntarily paid their first payment on account on time in January 2019."

Affected taxpayers who cannot get their payments on account reinstated should consider making their own provisions for a larger than usual tax bill in January.

Contact us to talk about filing a tax return.

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