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HMRC internal manual

Self Assessment Manual

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HM Revenue & Customs
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Amend payment: claim to adjust payments on account: receiving a claim to adjust payments on account

Background

Sections 59A (3) and (4) TMA 1970 allows for a claim to reduce payments on account to be made up to 31 January following the end of the tax year. For the claim to be valid the taxpayer must state the grounds for their belief that either

  • The expected liability under SA, after deducting tax paid at source, will be less than that determined by using the rules for calculating payments on account (SAM1100)

Or

  • There will be no SA liability or that any such liability will be covered by tax deducted at source

Note: The legislation does not stipulate that the grounds must be valid.

How to make a claim

Notification of a claim can be received in a variety of ways. Only claims that are made in writing, including by fax, or made using SA Online are to be considered. (The only exception is claims made by telephone to a Contact Centre).

If a taxpayer or agent tells you that payments on account need adjusting, or you need to advise a taxpayer how to make a claim to adjust payments on account,

  • Explain the claim must be in writing, including fax or using SA Online
  • Advise the taxpayer or agent that

    • A reason must be given if a reduction is claimed, and that
    • The reason must support the belief that reduced payments on account are payable Note: Penalties may be charged where fraudulent or negligent claims are made
  • Direct the customer to complete the SA303 online

Revise claim

A taxpayer can revise the amounts in an earlier claim. A revised claim is to be treated in exactly the same way as the very first claim. You can view any earlier adjustment by using the [View History] button in function MAINTAIN PAYMENTS ON ACCOUNT. This function is accessed from function VIEW STATEMENT.

Claim to carry-back relief

Where the reason given for a claim is that the taxpayer expects to apply or has applied for carry-back relief the claim cannot be rejected. Remember the legislation does not stipulate that the reason for the claim has to be valid. Although carry-back relief does not alter the self assessment for this or the earlier year and has no effect on the level of the payments on account for this year the claim must be processed.

Valid claim received

For instructions on how to deal with claims to amend payments on account, follow the action guide for Form SA303/claims to reduce payments on account. Where a valid claim has been made online by way of a Structured Action Request, the payments on account will be adjusted automatically and function SA NOTES automatically updated to record that the adjustment has been made. The SA Note will include a ‘reason code’ and further details regarding the codes and their meanings can be found under subject ‘Claims to adjust payments on account’, (see SAM1010).

Where returns include a claim to reduce payments on account, the claim is dealt with automatically when the return is captured. You do not need to issue form SA614 in these cases. Note: No SA note is made where a claim to reduce is received by this method.

If the claim is accompanied by a payment, the payment must be processed immediately. Before a claim can be processed it must be checked to ensure it is valid and that full information has been provided - see subject ‘Validity of Claim to Adjust Payment on Account’ (SAM1040).

Most claims are likely to ask for a reduction in the payments on account. Claims to increase payments on account will be less frequent. Claims to increase are to be processed in the same way as claims to reduce.

Penalties may be charged where fraudulent or negligent claims are made (see EM4660 Penalties).

Notes:

1. When a claim to adjust payments on account is processed the payment on account due dates do not change
   
2. When payments on account are adjusted the adjustment may not alter the amounts the taxpayer has to pay