Not everyone is aware that the HMRC Business Payment Support Service is only available for tax which has not yet fallen due so, if you want to defer tax payable for your second self-assessment payment on account, you need to do it straight away. Time to pay arrangements from HMRC are going to be harder to get and will be enforced more strictly. You can contact the Payment Support Service on 0845 302 1435.

HMRC is definitely tightening the criteria under which it will allow taxpayers to pay tax over an agreed period. The guidance published on their website now says: “You will need to explain why you cannot pay in full and on time, and what you have done to try to raise the money to pay your debt” It also says that further questions will be asked “Depending on why you can’t pay, how long you need to pay the rest, and your payment history..”

HMRC have just published a helpful online guide to paying income tax when you arrive in the UK. It’s also useful for those who are now non-resident in the UK. You can find it at the following here – Income Tax when arriving in the UK.

From 1st April, HMRC have new powers to penalise any taxpayer who fails to notify them of tax liabilties, files inaccurately or deliberately defaults. The number of taxes that are subject to Compliance Checks and inaccuracy penalties is also extended. To find more details go to the HMRC website. We can all be sure that life with HMRC is not going to get any easier.

The number of these emails continues to grow. They usually offer you a tax refund but you need to provide  your account details – DON’T! HMRC do not send emails like this so avoid the temptation to click further. There are examples of recent scams on the HMRC website.

The deadlines for making claims to recover overpaid tax are changing and the new limits relating to the 2004-05 and 2005-06 tax years are very close indeed so quick action will be necessary if a claim is to be made in time.

The new time limit gives taxpayers only 4 years from the end of the tax year in which the overpayment of tax occurred to make the claim.

Here are the new deadline dates:

Tax Year    Deadline
2003-04       31 January 2010
2004-05       31 March 2010
2005-06       5 April 2010
2006-07       5 April 2011
2007-08       5 April 2012
2008-09       5 April 2013

The other side of the coin is that from 1 April 2010 HMRC can only raise discovery assessments for up to 4 years, unless there has been careless or deliberate understatement. However, they can still go back 6 years for ‘careless’ behaviour and 20 years for ‘deliberate’ behaviour.

HMRC’s new IT system is continuing to generate widespread 2010/11 PAYE code errors. We have already received multiple Notices of Coding for the same client, in the same envelope. It is going to take some time for them to resolve the situation and it is possible that the errors will not be corrected in time for the start of the new tax year. HMRC’s advice if you think there is a problem with your tax code is as follows:

‘You should check your tax code using the guidance included with the Coding Notice and on our website. If you think that it may be incorrect or if you do not understand an entry on it, please telephone us on the number printed on your Coding Notice or 0845 3000 627 so we can make sure you have the right tax code applied in time for the beginning of the new tax year.’

If you pay your tax late HMRC will charge interest from the date the tax was due until your payment is received.

If you still haven’t paid your balancing payment (due on the 31 January) by 28 February, you may be charged a 5 per cent additional charge, called a surcharge, on top of the amount you still owe. This is in addition to any interest you’ve been asked to pay.

If you still haven’t paid all of the tax due on 31 January by 31 July, you may be charged a second 5 per cent surcharge on top of the amount you still owe.

Doing nothing can become very expensive, so act now.

Some people panic when they realize the 31st January deadline is nearly upon them; others freeze, not knowing what to do; while some just take it in their stride and accept the inevitability of the £100 fine. However, it is never wise to just accept that your tax return will be late, for two good reasons:

· Late tax returns give rise to an increased risk of an HMRC investigation into all your tax affairs
· The deadline from which HMRC can launch an investigation is also extended when the tax return is filed after the deadline

Given that the new regime of compliance checks and penalties is now well under way, we would recommend that this is a risk that is wise for you to avoid if at all possible. There is still time before the deadline to save yourself the £100 penalty. But act now! Time really is running out.

If you are still struggling to apply the new VAT changes, then there is some useful information on the HMRC website. You need to think about when the service or supply was made but check the guidelines to ensure you get it right. Remember too that the rates on the VAT Flat Rate Scheme also changed on the 1st January 2010, so remember to check your new rate if you are on the FRS.

Have a very Happy Christmas and a prosperous New Year.