Freelancers' Shop

HMRC glitch means self-employed could underpay tax

by Susie Hughes at 10:42 30/07/19 (News on Business)

Incorrect tax statements and missed reminders could result in self-employed taxpayers facing unexpectedly high tax bills in January 2020.

Advertisement Accountants, Moore Stephens, says that a glitch in HMRC’s systems could mean that thousands of self-employed individuals end up paying the wrong tax bill on July 31. In some cases, HMRC may have reduced the amount incorrectly or may have not issued taxpayers with a reminder at all. Taxpayers are being warned that this may lead to interest charges and cash flow issues in January 2020. Those that take incorrect assessments from HMRC at face value will need to be prepared that, come January 2020, they will need to pay their full tax bill for 2018/19 in one payment. Glitch The glitch will ultimately result in some people facing larger than usual tax bills when the final tax payment is due in January for which they may not have budgeted - having spent money that they should be setting aside for their tax bill. Although HMRC has said that taxpayers will not face interest charges in July 2019 on an incorrect statement, HMRC will be charging interest and potential surcharges if the full tax bill is not paid on time in January 2020 - even though this is could be due to an HMRC error. Advertisement HMRC’s position is that it is the taxpayer’s responsibility to check that any assessments are thoroughly reviewed to ensure they are correct. Lucienne Parry from Moore Stephens, said: “A larger than expected payment in January will not only shock some taxpayers but will leave them with a large hole in their budget as they are forced to pay a huge lump sum in tax. Many are therefore likely to face serious cashflow problems. “This is of particular concern given that many households are stretched due to the festive season. “In some cases, we have seen individuals being wrongly sent automatic refunds from HMRC, which will need to be repaid. Those impacted are going to think it very unfair that an HMRC error could lead to interest charges and in some cases potential surcharges. “If people have any doubt or questions on the tax they owe, it’s vital to have your 2018/19 tax calculations prepared as soon as possible to help them plan and avoid any potential shocks further down the line.” Late filing As the number of self-employed people in the UK continues to rise, this will mean that more people are having to file self-assessment tax returns for the first time. Those new to the process often rely on HMRC reminders and calculations to meet deadlines as they familiarise themselves with tax payments. However, HMRC seems to be narrowing the grounds for what it considers to be a reasonable excuse for filing late. Not receiving a reminder for payment is not deemed as an acceptable excuse. Just 14 per cent of all fines for late payments of self-assessment tax bills were cancelled last year, down from 16 per cent the year before, suggesting HMRC could be becoming less sympathetic. Tweet -- If you wish to comment on this article, please log in and use the Reply button below. Registering is free and easy - see 'Join Shout99'. - Susie Hughes © Shout99 2019

Printer Version

Copyright 1999-2018, Shout99.com | All Rights Reserved
Privacy Notice and Terms of Use