HMRC Tax Payment on Account Mix-Up

Rural businesses should budget for a larger than expected tax payment in January 2020 advises leading chartered accountants Saffery Champness.

Saffery Champness has discovered that a number of its farm and estate clients have received automatic refunds of payments made in January on account of income tax for the 2018/19 tax year. It transpires that this is because the HMRC system had not been set up to accept the first 2018/19 payment on account for some taxpayers.


Saffery Champness has also had confirmed that HMRC will not request payment of these amounts, which may now incorrectly be showing as late on some taxpayer’s accounts.

Instead, HMRC has said that it will collect the underpaid amounts as part of any balancing payment in respect of the 2018/19 tax year and due for payment by 31 January 2020. Interest will not be charged on these underpaid amounts.  

Martyn Dobinson, Partner, Saffery Champness, and a member of the firm’s Landed Estates and Rural Business Group, says:
It’s common sense that those who have received refunds in error should now budget to make these payments in the future. Unfortunately, this is not an unexpected windfall. Where unpaid payments on account have arisen from this issue, any interest demanded by HMRC should be challenged. Where there has been a genuine underpayment or late payment, interest and penalties may be due. A conversation with your advisor is a good move in either circumstance.

Also, given the potential for delays in receipt of the Basic Payment for 2019, January 2020 cash flow could be tight for many farming businesses. It would therefore be wise to factor these tax payments into the business cash flow now, or, better still, if the funds are available, get the outstanding tax bill paid.


Income tax payers required to make payments on account will normally make these as follows:

  • 1st payment on account by 31 January falling in the tax year.

  • 2nd payment on account by 31 July falling after the end of the tax year.

  • Any balancing amount by 31 January falling after the end of the tax year.

Saffery Champness

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