Updated: Jul 26, 2020
Utter Confusion Reigns.
And what am I talking about ? The July self assessment payment on account.
Let's go back and review where we are.
The self assessment system, for most taxpayers, requires payments to be made January and July each year. Simples.
Then the crisis hits and the Chancellor says 'All self employed can defer their July tax payments on profits to January'
Great. Except many self employed clients have tax to pay on other income too, how do we allocate tax on self employed profits when the last twenty years of tax reforms have amalgamated it together ?
Presumably someone wise had a word in the Chancellor's ear. Within a few days the statement changed to 'All self assessment tax due end July where the taxpayer has been affected by COVID 19 can defer to January'
That makes more sense.
Nobody told the HMRC website curator about the underlined words, ever since, the HMRC website has in BOLD said that everyone can defer.
Ever helpful, the revered Institute of Chartered Accountants in England and Wales have been at pains to remind its members that if we advise all clients to defer, they will see that as a potential disciplinary offence, and if we see clients deferring who we think haven't been affected by COVID 19 we should consider reporting them.
Thanks for that - really helpful (in the middle of what the Bank of England have called the biggest crisis in 300 years). They further recommend that we tell all our clients to pay in July anyway as, to paraphrase, 'that will be easier'
Then came the early batches of July statements (the ones HMRC had previously said they weren't issuing). These showed tax due 31st July with a statement in bold that 'if you are affected you can defer until 31st January'.
HMRC's software is set up to automatically chase tax debt if not paid at the end of July. That obviously was going to prove awkward so they changed the coding.
The result of the software change is that the later batches of statements show the July tax bill being due January for all taxpayers.
So the position is as follows:-
1. If you have a self assessment tax liability due end July and are affected by COVID 19 you can defer it until January. This is regardless of what any statement issued by HMRC says.
2. If you defer it, nothing needs to be done to tell HMRC that you are deferring
3. HMRC will not chase it, will not charge interest nor penalties, but
4. It does need to be paid in January, after which they will be chasing with some vigour.
5. If you want to pay anyway - regardless of whether or not you are affected by COVID 19 - then you can, with no need to tell HMRC.
I hope that helps. There's no wonder I feel older by the day.
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What are my positives today ?
1. An upset client
I find it funny that I've spent most of my career trying not to upset clients only to court trouble almost deliberately with these emails.
I was expecting this one, especially that even as I was writing Vol 2 Ed 30 I knew who I was seeing the next day
So, sorry Henry, I really did know that the picture of Sweden's finest on Thursday wasn't a Ferrari.
I ought to explain, Henry runs a classic car brokerage, see http://www.hrbautomotive.com
And to prove the point he led me to the 328 GTS that he has for sale and pointed out every reason why it could never be mistaken for a Volvo. (Although, to be fair, it's still red).
I took the video home and dropped a few hints, it got renamed the Ferrari 2:-
- 2 expensive
- The servicing and insurance costs 2 much
- 2 much fuel
- 2 noisy
- 2 environmentally unfriendly
- We have 2 children, it has 2 seats
It's still on the market, it is a fun investment, gains are tax free, and is truly gorgeous.
2. I found a Facemask
I hated the idea of having to wear a facemark when shopping. But I've found a solution, courtesy of eBay. Just waiting for it to arrive, then off to Tesco...
3. And it's the weekend again.
Quite how I'm not sure...enjoy
Stay safe, stay positive
Compare and contrast. The car above is a Ferrari ! A 328GTS it's gorgeous and it's for sale. The car below is a Volvo, it's hideous and probably couldn't be given away. Please don't confuse them - Henry will get cross