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HMRC internal manual

Compliance Operational Guidance

From
HM Revenue & Customs
Updated
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Supporting Guidance: employer compliance: guidance by subject: settlement: payment on account

Payments on account of a Class 6 settlement should be sought where

  • (This content has been withheld because of exemptions in the Freedom of Information Act 2000) COG915065(This content has been withheld because of exemptions in the Freedom of Information Act 2000)  (This content has been withheld because of exemptions in the Freedom of Information Act 2000)  
  • PAYE, NICs, CIS deductions might be at risk because of the employer’s or contractor’s uncertain financial position
  • a compliance check is complete except for an outstanding point which may delay settlement for some time
  • the employer or contractor has requested time to pay
  • it has been established that there is a liability which will give rise to an interest charge.

You should

  • not refuse a payment on account if offered spontaneously even if it is not within the circumstances above
  • point out that the advantage of making a payment on account will be to minimise the interest accruing
  • take care not to accept a payment on account which may be more than the probable duties in the eventual settlement
  • treat any payment on account as first clearing any interest bearing liability, except

    • where the payment is in respect of a specified NIC liability made to avoid time barring or protection of the debt (COG915225(This content has been withheld because of exemptions in the Freedom of Information Act 2000) )
    • the employer/contractor is insistent that the payment is allocated against a specific liability regardless of whether interest continues to accrue on other liabilities
  • include the full circumstances of the payment in the case papers and, where appropriate, the notes of meeting.

On the day you receive the cheque you must

  • ask the SAFE nominee to produce a SAFE payslip (PS2) showing the taxpayer’s SAFE Customer Reference and
  • send the cheque and payslip (This content has been withheld because of exemptions in the Freedom of Information Act 2000)

    (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
    (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
    (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
    (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
    (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
    (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
    (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
    (This content has been withheld because of exemptions in the Freedom of Information Act 2000)  

  • check whether a disclaimer letter is needed (EM1937)
  • make it clear, and follow up in writing, that the payment is accepted without committing the Board to any particular action.

For example 

‘I acknowledge receipt of the payment of £……. on ……. . As discussed at our meeting on ……., it is accepted as a payment on account only and without committing the Commissioners for HM Revenue & Customs to any particular course of action when the case is reported to them.’

Spontaneous payments on account are not uncommon. Always scrutinise any covering letter carefully in the light of (EM1937).

See also COG914560 - Instalment Arrangements- Payment by Direct Debit.