28 September 2022
We first started receiving panicked emails and phone calls from clients a few weeks ago, sending us copies of ‘Missed Self-assessment payments’ letters received from HMRC’s debt management division. Whilst for the first few we thought it may have been due to quoting an incorrect payment reference or sending cheques to the wrong address, we quickly realised our clients were doing everything right and it was in fact HMRC’s system that seemed to be the issue.
After speaking to HMRC operators, it was confirmed that there is a known issue with July payments on account settled by cheque which seem to be cashed in by HMRC and then left floating somewhere in the ether. The second part of the issue is that while HMRC manually track the payments, which usually takes them up to five weeks to allocate correctly, taxpayers are getting slapped with late payment interest charges (which from 11 October has risen to 4.75%) as the HMRC system shows their July payment on account still outstanding.
It may not be deliberate, but this is another example of HMRC’s processes penalising the digitally excluded. The system difficulties at HMRC have resulted in people not using electronic means of payment being treated unfairly. The only taxpayers that currently find themselves in this situation are seemingly those who have paid their liabilities by cheque (which is a perfectly legal and acceptable method of payment), even if they did make payment weeks before the 31 July deadline. It seems unlikely that this is a camouflaged attack on those that do not wish to settle their tax bills online but it is another example of HMRC’s service levels failing to return to their pre-pandemic capabilities. Either way, it is inexcusable for compliant taxpayers to be chased by HMRC’s debt management division for tax liabilities that have been paid months ago.
The cherry on top seems to be that even after contacting HMRC and asking them to track the cheques and allocate the payments to the correct accounts, debt management continue to call and chase our clients by letter, as apparently, they do not have access to the file notes made by their customer service colleagues who are trying to resolve the matter.
There is also a worry (founded on experience) that even when the July payment on account issue is fixed, there could still be a fight to cancel the late payment interest accrued on the taxpayers’ accounts.
The situation many taxpayers find themselves in is unfair and those that struggle to resolve this issue themselves may wish to seek advice from their accountant or tax advisor or potentially seek support from charities such as TaxAid.