Payment on account, will changes flag me for attention?

[craigy1874]

I agree with Michael, been doing this for 20 years and never heard of any flags being raised by payment on account reductions.

At the end of the day you pay interest if you reduce them excessively so HMRC are (other than perhaps cash-flow) not any worse off.

[northernladuk]

Erm... playing devils advocate... but it will if he gets it wrong?

[radish2008]

Erm... playing devils advocate... but it will if he gets it wrong?

I agree - I would much rather pay more now and get the refund than get it wrong. I'm in exactly this position now - looking at coming out of a well paid contract in July and then maybe down to a lower paid local gig - or I might get extended again.

[craigy1874]

Erm... playing devils advocate... but it will if he gets it wrong?

Erm...you pay an interest charge, which is an automated calculation, so still no problem.

[northernladuk]

Erm...you pay an interest charge, which is an automated calculation, so still no problem.

But then you are flagged for attention which is the whole point of the thread no? I believe IR35 investigations come from issues like this and if that's the case I'd guess tax investigations would be the same.

[Jessica@WhiteFieldTax]

But then you are flagged for attention which is the whole point of the thread no? I believe IR35 investigations come from issues like this and if that's the case I'd guess tax investigations would be the same.

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Ir35 investigations come down the employer route, not self assessment. The chances of HMRC cross team working are minimal, even if they did flag for investigation the reduction in POA, which is unlikely.

In 31 years I've seen a POA reduction cause an issue with HMRC once, and that was 28 years ago before the POA regime as it is now.

[craigy1874]

But then you are flagged for attention which is the whole point of the thread no? I believe IR35 investigations come from issues like this and if that's the case I'd guess tax investigations would be the same.

You believe wrong. IR35 enquiry from a payment on account reduction? That's what I call paranoia!

There is no attention flagged for reducing payments on account. It is a legitimate mechanism for ensuring you pay the correct amount of tax and nothing more, i.e. Self-Assessment.

I always advise my clients not to raise their head above the parapet, but reducing payments on account does not count as one of these situations.

[WordIsBond]

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Ir35 investigations come down the employer route, not self assessment.

I have considered jettisoning all UK clients and strictly doing international clients. I'm actually not making that much on UK clients anyway, the real money in what I'm doing is on the other side of the pond.

Are you saying that if I did that I could forget about IR35 because they'd never come looking at it? That IR35 investigations always start from the clients?

[Jessica@WhiteFieldTax]

I have considered jettisoning all UK clients and strictly doing international clients. I'm actually not making that much on UK clients anyway, the real money in what I'm doing is on the other side of the pond.

Are you saying that if I did that I could forget about IR35 because they'd never come looking at it? That IR35 investigations always start from the clients?

No ** employer route ** as in Employer Compliance for contractor.

think about a PSCs interaction with HMRC:

- Corporation Tax
- VAT
- PAYE/NI (Employer compliance)
- Self Assessment

Its the PAYE/NI/Employer Compliance where IR35 starts, unless they are cross duty working which is quite rare.

Of course, it would be expected that intelligence from agencies and the Off Payroll Reporting Requirements would feed into this. There is little evidence, based on take up of IR35 work, it is.

Can / does IR35 apply internationally? Yes. Can HMRC make the case stick? Probably not. There is other low hanging fruit for them.

[WordIsBond]

Thanks, Jessica. Reading is hard, I failed it that time.

Your statement about IR35 and international contracts fits my understanding. I just wondered if you were going further and saying it would never be investigated, but it sounds like the risk is still there (at least in principle), but minimal.