HMRC Time to Pay rejections…

HMRC’s online service that enables tax payers to defer tax due on the 31st January is rejecting applications. Understandably, this is causing worry at a time when taxpayers could do without it!

In this post, we’ll look at what’s going wrong, and what you can do about it.

What Tax might be due?

The total tax payable by the 31st January by an individual could include the following liabilities:

• balancing income tax payment for 2019/20
• second income tax payment on account for 2019/20 – deferred from July 2020
• first income tax payment on account for 2020/21 – half of total 2019/20 liability
• any capital gains tax for 2019/20
• classes 2 and 4 NIC for 2019/20.

Any taxpayers who are VAT registered may also have VAT liabilities that have been deferred from payment due between 20th March to 30th June 2020, which now need to be paid by 31st March 2021. (This VAT can be delayed further using the coming online deferral system, due to launch in the next few weeks.)

Online deferral agreement

HMRC set up an online application process for taxpayers to spread these liabilities, largely because they knew there was likely to be surge in applications as a result of the pandemic.

There are some criteria that you must be able to meet in advance of any application, as follows:

• Payment has to be by Direct Debit.
• The total debt has to be cleared within 12 months.
• The 2019/20 Tax Return has to have been filed.
• All earlier Returns have to have been filed.
• The tax debt has to be more than £32 and less than £30,000. (See below for what to do if your lability exceeds this amount.)
• No other tax instalment plans can be in place.

In any of the above cases, the system will return an error: ‘Not eligible for an online payment plan.’.

This error isn’t always entirely accurate!

Problem 1

If your 2019/20 Tax Return, due to be filed by 31st January 2021, hasn’t yet been processed by HMRC, they will reject your online application for a payment arrangement. They can take up 72 hours to process an electronically submitted Tax Return.

As the number of submissions increases as the deadline draws ever closer, this time scale may well increase further.

Problem 2

If your Tax Return includes a claim for the Transferable Marriage Allowance or Entrepreneurs’ Relief, manual intervention by HMRC may well be required to set up a payment arrangement, so don’t just accept the error message!

What can you do?

If you receive the error message shown above, you can call HMRC’s self assessment payment helpline on 0300 200 3822 to discuss a payment plan with a real, live person! This line is open from 8am to 6pm, Monday to Friday.

This is also the number to call if your liability exceeds the £30,000 limit.

You will need to have the following details when you call:

• Your UTR number or NI number (shown on the top of your Tax Return or any other correspondence from HMRC).
• Your name and address.
• Details of the tax payment to be deferred.
• Details of any tax repayments you may be waiting for.

Other Important Points to note:

1 It’s also worth considering whether your payments on account for 2020/21 are still at a realistic level.

Although your trading income may have been hit by Coronavirus, any grants received will be included in those figures when you declare them on your Tax Return, and if they are underpaid now, interest will become due on the unpaid amounts.

2 Be careful of deferring National Insurance Contributions. 

If National Insurance Contributions for 2019/20 aren’t paid by 31st January 2021, the tax year will not count as a completed year in your National Insurance Contributions record.

If you’re unsure about any of the above, please get in touch. We can talk you through the process, and make sure you have all of the necessary information to hand if you need to contact HMRC. We’d be really interested to know if you how you get on with any application for a payment arrangement so do let us know of your experience.

Our advice would be to get your application in as quickly as possible. As the deadline of 31st January gets closer, the online system is more likely to to falter, and the telephone lines will get ever busier!