Payment on Account - GIANT to Own Company

[David Fallon]

I am in the process of filling in my online self assessment when I noticed that the 'payment on account' figure is added on top of the tax bill for year 06/07.

The year in question was when I was working with the managed service company GIANT (short term solution to get me started in contracting) - having left them now to start up my own company.

My questions are:

1) I was wondering if I had grounds to reduce my 'payment on account figure'? This is due to the fact that last financial year (06/07) I was with GIANT and this financial year (07/08) I will be operating on my own company. Because I am a bit more experienced in dealing in handling my affairs now I don't anticipate my tax bill to be as high for 07/08 than it is for 06/07.

2) If I decide to make an application to reduce my payment on account figure then does it need to be authorised by the revenue before 31/01/08 i.e. before I make my payment or can I pay the basic amount before the 'payment on account' figure is added and wait for the revenue's decision?

Any assistance would be much appreciated and I'm sorry if this points are covered elsewhere but I couldn't see a similar post.

Regards.

[malvolio]

...snip...

Any assistance would be much appreciated and I'm sorry if this points are covered elsewhere but I couldn't see a similar post.

Regards.

What - like this one from the thread called "Payment on Account" on this board?

http://forums.contractoruk.com/410896-post4.html

Quick answer is to talk to Hector and agree a sensible value.

[Bumfluff]

I am in the process of filling in my online self assessment when I noticed that the 'payment on account' figure is added on top of the tax bill for year 06/07.

The year in question was when I was working with the managed service company GIANT (short term solution to get me started in contracting) - having left them now to start up my own company.

My questions are:

1) I was wondering if I had grounds to reduce my 'payment on account figure'? This is due to the fact that last financial year (06/07) I was with GIANT and this financial year (07/08) I will be operating on my own company. Because I am a bit more experienced in dealing in handling my affairs now I don't anticipate my tax bill to be as high for 07/08 than it is for 06/07.

2) If I decide to make an application to reduce my payment on account figure then does it need to be authorised by the revenue before 31/01/08 i.e. before I make my payment or can I pay the basic amount before the 'payment on account' figure is added and wait for the revenue's decision?

Any assistance would be much appreciated and I'm sorry if this points are covered elsewhere but I couldn't see a similar post.

Regards.

I very much doubt that swapping from GIANT to your own LTD would reduce the tax you owe, unless in the year you were with you own LTD you worked less or paid yourself less .

You can apply for your payment on account to be reduced (there is a link on SA online if your doing it online), however if you owe more than what you reduce it to you will pay interest on that amount. If you over pay they will give you interest as well. What Im doing this year is paying my first payment on account as I know I will owe at least this amount of tax, then I will submit my tax return for 2007-08 before July 31st when the next payment account is due and will work out the difference and what you actually owe, someone on here has done this before and it works apperently.

[Ardesco]

I very much doubt that swapping from GIANT to your own LTD would reduce the tax you owe, unless in the year you were with you own LTD you worked less or paid yourself less .

You can apply for your payment on account to be reduced (there is a link on SA online if your doing it online), however if you owe more than what you reduce it to you will pay interest on that amount. If you over pay they will give you interest as well. What Im doing this year is paying my first payment on account as I know I will owe at least this amount of tax, then I will submit my tax return for 2007-08 before July 31st when the next payment account is due and will work out the difference and what you actually owe, someone on here has done this before and it works apperently.

Working through Giant everything would have been paid to him as PAYE whereas with his own limited he can put £5000 through as PAYE and take the rest as dividend which will result in a much lower tax burden.

[David Fallon]

Thanks for the advice - it's just a case of ridding myself of the final remants of GIANT. I know the tax bill for 07/08 will be much lower as I can control my dividends more and there are pension contributions etc to take into account.

At least with your own Ltd company which I have had since April you can control things so much better. By the way thanks for not savaging me too much Malvolio - I only got a mild rebuke. I shall indeed speak to 'Hector' on the phone and try and come to some sort of agreement.

Thanks again everyone for the advice.

P.S. I am wondering why he is called Hector....

[minstrel]

P.S. I am wondering why he is called Hector....

Hector was the name of the cartoon character the Inland Revenue used to represent the tax max in advertising.

They stopped using him in the early 2001, but the name has stuck.

http://news.bbc.co.uk/1/hi/uk/1109716.stm

[David Fallon]

Hector was the name of the cartoon character the Inland Revenue used to represent the tax max in advertising.

They stopped using him in the early 2001, but the name has stuck.

http://news.bbc.co.uk/1/hi/uk/1109716.stm

Now I know..thanks for that..

As Inland Revenue spokeswoman Claudine Lashley says: "Not everybody in the staff or outside liked Hector."