Self Assessment Payment on Account

[Silversprinkles]

My friend is in a tizzy and I'm not sure how to help her.
She knows she's left it very late! She's submitted her Self Assessment return today for the deadline tomorrow.
She's a recent very small business owner (about 2 years I think).
She says she made "payment on account" last year towards this bill but it doesn't seem to have been taken off, and she's being asked for more towards the next year too.

I've had a quick look on HMRC but honestly it's not my thing, I'm as lost as she is, and I'm sure their calculations are right. But she thinks it's not - and should be paying less due to these payments on account.

What's best? Just tell her to phone HMRC tomorrow? - will she stand a chance of getting through on Deadline Day at all???

Any help appreciated.

If shes been self employed long enough to have previously paid 'payment on account' she should have paid the following for the 2020/2021 year that's she has filed today

Payment on account 31st Jan 21
Payment on account 31st July 21

These two will total the amount that she was liable for in tax for the 2019/2020 tax year.

If the amount she paid on this two dates is less than what she owes for the 2020/ 2021 tax year, she also needs to pay the balance of that now. She will see her payment details online of what has been paid.

In addition to this, she will also need to make a further payment on account 31st January 2022, that is half the amount of tax she is liable for on the 2020/2021 return, towards her tax for 2022 tax year.

She may be able to query the payment on account for last year, but she will need to pay the payment on account that is now due for tomorrow.

What's best? Just tell her to phone HMRC tomorrow? - will she stand a chance of getting through on Deadline Day at all???

Slim to nil. Hindsight's a marvellous thing but this is a really rookie error.

I am self-employed very part-time. Had a good year in the last tax year but will have lower earnings for the current tax year as I have changed jobs and gone back to Uni. So I just adjusted my payment on account to 0.

Agree with the sums stated by @Sparkle123r. add together what's she's already paid on account, deduct from what's due. Pay that. She may also have to pay on account now for the 21/22 tax year depending on earnings.

And maybe suggest she sorts herself out, or gets an accountant? It's these silly, disorganised issues which make small businesses fold, because owners aren't on top of tax and then are hit with a bill which causes cashflow issues.

The deadline for this year had been extended to 28 February anyway so she should be able to get through.

If she is being asked to make a payment then her payment wasn't large enough. The July payment will be in respect of half tax due send then same would need to make a January one for the other half plus any balancing payment if she earned more than was anticipated (usually based on what she earned last year).

www.gov.uk/government/news/hmrc-gives-self-assessment-taxpayers-more-time-to-ease-covid-19-pressures

They have eased deadlines but will still charge interest on sums due from 1st Feb.

The SA return itself doesn't take payments on account into account, so the "total tax" amount due won't account for them - she'll have to deduct them herself.

It's because the SA return system and the "collector of taxes" accounts system aren't integrated, so the SA return doesn't know whether or not the POAs have been paid, at the point of submission.

It all comes out in the wash a few days later when the figures from the SA are populated into the "collector" accounts system.

Yes, it always looks scary when you first file because it doesn’t factor in any of the payments on account. So it might look like she owes masses more than she in fact does. It can take a couple of days to update.

It alarms me every year even though I know!

She needs to work out herself what's left to pay for the 20-21 year taking away what she's paid on account, it doesnt update it for you.

@Badbadbunny

The SA return itself doesn't take payments on account into account, so the "total tax" amount due won't account for them - she'll have to deduct them herself.

It's because the SA return system and the "collector of taxes" accounts system aren't integrated, so the SA return doesn't know whether or not the POAs have been paid, at the point of submission.

It all comes out in the wash a few days later when the figures from the SA are populated into the "collector" accounts system.

Ok this helps me thank you.

When you say it comes out in the wash, will she be sent a refund or something?

She doesn't need a refund if she just pays the remaining balance.