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May 18

SA tax payments due again

  • 18 May 2017

Your self-employed clients will no doubt be viewing the settlement of the approaching second payment on account for 2016-17 with the usual lack of enthusiasm, on the basis that is, that they are aware of taxes falling due?

This will include practitioners that have resisted incorporation thus far…

It would be interesting to compare the way in which firms manage this period for clients. For example:

  • In this digital age, when we have relatively easy access to clients’ accounts data, do firms automatically review clients’ SA payments on account when it is clear that profits are falling year on year?
  • And if profits are increasing, do firms provide a reminder of potential underpayments falling due the following January?
  • There is also the old chestnut – have clients organised their cash flow to accommodate these payments as they fall due?

Hopefully, firms who are keen to develop good working relationships with clients will have acted on all three.

If and when MTD starts to make an appearance, this process of support and management of liabilities will settle more so on the content of clients’ Personal Tax Accounts (PTAs). HMRC’s guidelines suggest that clients may want to make voluntary payments on account towards future liabilities, the infamous Pay As You Go notion. Well, I guess we all know which way that process will pan out?

But, it is a short step from voluntary PAYG to compulsory PAYG. If HMRC succeed in gathering quarterly data, why should they not pursue quarterly payments based on these numbers?

Best to keep a weather eye on developments in these areas, and it won’t just be the self-employed who are affected. Companies are being drawn into the MTD net and could equally be required to make quarterly tax payments on account, with perhaps an annual settlement nine months after the year end?

Meanwhile, be prepared for the rash of clients, who yet again, have not made provision for the July payment on account. We will have to coach them through the usual negotiation with HMRC’s Business Support Centre; the number in case you have forgotten is 0300 200 3835.