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The Low Incomes Tax Reform Group warns taxpayers to make sure that they have HM Revenue & Customs' latest bank details when paying their tax bills.

Introduction

For taxpayers in self assessment, 31 January is a key deadline.  Most electronic tax returns for the year to 5 April 2009 must be filed by 31 January 2010 and you need to settle up what you owe under self assessment for the year by that date.   

You might also have to make a payment on account towards your 2009/10 liability. 

The useful links below give more information on key dates for self assessment, and some specific reminders of things to think about this month. 

Check you are using HMRC’s correct bank details

Due to a change in their banking arrangements, HMRC have posted a notice on their website -HMRC's Old Bank Accounts are Closing - Make Sure You Use the New Ones - asking you to check the bank details you use when you make payments to them. 

You should take careful note of these changes if you pay your tax by:

• Internet banking
• Telephone banking
• BACS
• CHAPS
• Bank giro

Make sure you update the bank details when you give the instruction for your payment for any of the first four; and, if you pay by bank giro, use a current payslip not an old one. 

If you pay by direct debit, you should not need to do anything as the changes should have been made automatically. 

Important – take action!

HMRC warn that any future payments using their old bank details could be rejected, which could cause a delay in your payment reaching HMRC.  You will have to re-send the payment, and if it is then late you could be charged interest and late payment penalties (or surcharges). 

… but are HMRC penalties lawful? 

In our view, taxpayers who have not known about the change and pay late as a result have a reasonable excuse for late payment, and should not be charged a penalty, so long as they make payment to the right bank within a reasonable time of being told that their first payment has been rejected.  Any attempt by HMRC to charge a penalty in those circumstances should be resisted.

And what about interest?

In last year’s consultation on the subject of interest and penalties, Meeting the Obligations to File Returns and Pay Tax on Time, HMRC say that there is ‘a different role for interest and penalties’.  Essentially, interest should be charged to provide recompense and penalties to deter undesirable behaviour. 

But would it be fair even to charge interest? If HMRC have not bothered to write to me as one of their customers to tell me of the change, isn’t it their fault if it takes me a few days more because of rejection ? Could they not have made arrangements in this transitional year to ensure an automatic transfer between their old account and the new one? Have we not a right to expect that of a customer-focused organisation?

In any event the rate of interest that HMRC will impose is 3%. Is that fair recompense when the Bank of England base rate is half of one per cent and banks are barely offering taxpayers that rate for their short-term savings?

We think that for these, hopefully few, cases that HMRC will accept that the situation is primarily their own fault. So when a payment rejection can be shown to have occurred, followed by swift follow-up payment, there should be no interest either.

Useful links

For other January reminders, read our previous article, Tax and Benefit Deadlines - Act Now!

LITRG's article on Self-Assessment.