www.iva.co.uk

Hi,

I started my IVA in November 2013 with a decent firm who post on this site. I have a question re tax that I don't seem to be able to get an answer for.

I am self employed. when I went into the IVA the scheduled HMRC debts for income tax were about £33k. This was made up of an outstanding payment on account of £10,400 from July 2013 and an estimated remaining liability for the January payment on account and balancing payment of £23000.

I have been issued with a new UTR, and I effectively start again.

i had to pay £9000 into the IVA towards tax as well.

I understand that the IVA wraps up all of my HMRC taxation debts for the fiscal year 2013 to 2014 that being the year in which I entered the arrangement.

The amount of the actual debt to the revenue will not be known until they get my tax return for that year at which point they will finalise their claim on the IVA.


My question is, am I right in my assessment that my January 2015 payment will simply be the first payment on account for the tax year 2014-2015. And that any balancing payment due for the year to April 2014 will be included in the final revenue claim on the iva.

Any help will be appreciated

M

As I understand it, as long as you make that payment against your new UTR it will go to the upcoming tax years liabilities.

All of the 2013 - 2014 liability, including any balance due, will be dealt with within the IVA.

You are right in what you are thinking that anything due in January will only relate to the tax year 2014/15. Sometimes HMRC do not ask for anything but treat the new UTR as if it was your first day in self employment. That means you pay nothing until Jan 2016 which would be the liability for 2014/15 and first payment on account 15/16. Provided you save the money each month to make the payments it will make no difference when HMRC ask for it.

I hope this makes sense.

Hi, thanks for the response Michael. I am with your firm. I shouldn't make any difference that my accounting period end is 30/4 for these purposes, it's the tax year that matters. Is that right?

It is the liability within the tax year that matters and not the year end. Therefore you will only be liable for the tax owing in the years 2014/15 going forward. It should be easier now you have a new UTR as the liabilities will be allocated against this number.

Hi Michael,

plainly i would rather earn the interest, how do I find out of HMRC expect a POA in January for the 2015 liability or whether they will expect the whole liability to be paid in Jan 2016

Marc

HMRC will usually issue a statement detailing payments to be made so keep the money in the bank until they request it. If they operate solely based on the new UTR they may not have the systems in place for a POA since there would be no previous listed liability on which to base the payment. The likelihood is that the first payment will not need to be made until Jan 2016 at which time the full 2014/15 liability will be due plus POA for 2015/16.

This is the normal way it operates but occasionally I have seen local offices ask for a payment on account earlier.