Tax Fraud

[Flip]

Hello, I've been self employed for some years now and I've always paid my tax on time. However, after I paid my tax for the last tax year, I was asked, for the first time,to pay additional tax upfront for the following tax year. I haven't paid this yet as I believe this is an attempted fraud by an individual within HRMC. Has anyone else been asked to pay tax upfront before they've earned?

 

[Newchodge]

Hello, I've been self employed for some years now and I've always paid my tax on time. However, after I paid my tax for the last tax year, I was asked, for the first time,to pay additional tax upfront for the following tax year. I haven't paid this yet as I believe this is an attempted fraud by an individual within HRMC. Has anyone else been asked to pay tax upfront before they've earned?

I am very surprised this has not happened to you before. You pay 2019/20 tax by January 21. In July 21 you pay part of 20/21 tax calculated based on 2019/20 figures. Bog standard. If 20/21 profits are reduced you ask to pay less.

 

[Aniela]

This is completely normal.

 

[DWS]

They are called ‘payments on account’ and as said are standard, if your last tax bill was above £1000.00

 

[WaveJumper]

Normal practise: (don't miss your dealings and then get fined)
https://www.gov.uk/understand-self-assessment-bill/payments-on-account

 

[Flip]

I am very surprised this has not happened to you before. You pay 2019/20 tax by January 21. In July 21 you pay part of 20/21 tax calculated based on 2019/20 figures. Bog standard. If 20/21 profits are reduced you ask to pay less.

I've been self employed for nearly 6 years and this is the first time I've been asked. None of my other peers have been asked to pay upfront. I have reasonable good reason to suspect that some individual within is attempting fraud. I always provide true transparency, to HRMC, about all my earnings

 

[DontAsk]

Perfectly normal but if you think your next tax bill will be lower than twice the payment on account you can request that the payment on account be reduced, or even cancelled (I have done this).

 

[DontAsk]

I have reasonable good reason to suspect that some individual within is attempting fraud.

How?

Payments are all made to the same HMRC account. If they have access to syphon payments from HMRCs bank account I think they would be South America by now.

Are you being asked to pay by a different means? Are they contacting you by unofficial channels?

Have you setup an on-line account with HMRC? You can see all your tax details and it will show when the payment on account is due, etc.,...

 

[Paul Norman]

Provided you pay the money to the usual account with the HMRC then you are not at risk.

But, if you are uncertain, phone the HMRC - although this is likely to mean listening to on hold music for many hours, as they are all at home isolating.

Or, and I don't advise this, just ignore it and wait for them to chase it up.

The correct advice, of course, is to talk to an accountant.

Like many others on here, I too have often been asked to make an on account payment in my self employed days.

 

[DWS]

Everybody who has a tax bill higher than £1000.00 or they have paid less than 80% of the tax bill in deductions has to pay payments on account, could it be that you were a sub-contractor before and having 20% deducted?
They are not really advance payments as HMRC look at it that by the 31st January you should already have kept 9 months worth of tax.

 

[MyAccountantOnline]

Hello, I've been self employed for some years now and I've always paid my tax on time. However, after I paid my tax for the last tax year, I was asked, for the first time,to pay additional tax upfront for the following tax year. I haven't paid this yet as I believe this is an attempted fraud by an individual within HRMC. Has anyone else been asked to pay tax upfront before they've earned?

No its really not tax fruad to be asked for payments on account for the current tax year when you are self employed.

A huge number of self employed tax payers will have to do this.

When you calculate your tax liability you'll be able to see if you need to make payments on account for the current year. Have a read of the information at the link posted above.

 

[Flip]

Perfectly normal but if you think your next tax bill will be lower than twice the payment on account you can request that the payment on account be reduced, or even cancelled (I have done this).

Cool!

 

[DWS]

Cool!

But if you do reduce it and your actual tax bill turns out to be higher then you will have to pay interest on the difference between what the POA was and what you reduced it to

 

[Ian J]

I have reasonable good reason to suspect that some individual within is attempting fraud.

I'm sure that I'm not the only one interested to know what this reasonably good reason is.

My accountant has submitted self assessments returns on my behalf for the last 20 years and I have always had to pay 50% of my tax up front on behalf of the next year

 

[UK Contractor Accountant]

Might be the SEISS grant money claimed for last tax year which has topped up your earnings

 

[Flip]

But if you do reduce it and your actual tax bill turns out to be higher then you will have to pay interest on the difference between what the POA was and what you reduced it to

Cool!