Self Assessment System - What to do if one cannot pay?

[SandAndHills]

Hi!
It’s my first post, so please be gentle.
I am new to Mumsnet and I apologise if this is not much of an AIBU.

Back in September 2019, my mother changed her job and she received a letter from HMRC saying she can underpaid tax in the tax year 2018/2017.
In May 2017 she had left her previous job and started at her old company. She then left the old company to come to her new job in Sep 2019.
I called HMRC on her behalf as she owed about £600 in income tax.
The letter stated that the tax was for the year 2019 so I queried the figures stated.

The lady at HMRC agreed that my mother would be making small monthly payments over the next two years towards covering the cost of the unpaid tax.

Unfortunately, we have just received another letter asking for £600. I have called HMRC today and they have stated that since we queried the original letter, the tax was recalculated and my mother can no longer pay the money back in monthly instalments.
She has less than 3 months to pay £600.

I am worried as I worry how we will afford this at the moment.

Does anybody have similar experiences with the self assessment system.

What happens when she cannot pay once the 3 months are up?

Thanks!

Get an accountant to help you. They normally save you more than they cost.

www.gov.uk/difficulties-paying-hmrc
www.gov.uk/pay-self-assessment-tax-bill/through-your-tax-code

They may be some help, although it looks rather confusing and its probably best to call them. Did they ask her to do a tax return?

Usually back tax under 3K can be collected by adjusting tax code (HMRC do this) so you pay more tax. The fact they haven't done this means they have either made an error or there's a reason they can't collect by using a code change.

Call them and talk to them - it's all you can do.

You mention self assessment but then talk about your DM 'having jobs'. Is she self employed, employed or a bit of both?

Self assessment doesn't apply to people in normal PAYE jobs, but the self employed and people with extra income or payments to make (eg landlords, or high earning parents needing to pay back CB.

In any case, does your DM have records of what she has earnt (eg P60s) and paid tax in the years 2017/2018 and 2018/19? Or she can look in her account with HMRC but will need to register first.

If she puts details of what she has earnt into an online calculator such as listentotaxman.com/ (watch out for pension contributions, company cars and anything else 'non standard') to see what tax she should have paid and compare it with what she has paid, to see if the amounts requested by HMRC are correct.

If she does owe tax, and has PAYE income, she can usually pay it over the next tax year 2020/21 to spread the load.

I think I was told I had to pay some back tax as a lump sum but I wrote to them querying why they couldn't collect it via PAYE and they wrote and said that they would.

£600 really isn't very much to HMRC, they should be able to collect via PAYE and then it's £50 a month which will hopefully be a manageable deduction for your mum over a year. Push back at them and ask for the reasons why? If she can't afford it, she can't afford it and it's in their interest to do it via the PAYE system.

Self assessment doesn't apply to people in normal PAYE jobs, but the self employed and people with extra income or payments to make (eg landlords, or high earning parents needing to pay back CB.

It applies mainly to anyone who has any complicating factor that means PAYE doesn't necessarily get everything right, and I wonder whether that means that someone who has some outstanding tax owing from a previous year may need to go through filling in the tax return form. It looks like paying in instalments is sometimes dependent on having submitted a tax return.

Hopefully cologne's experience is a good sign that this can all be fixed.