Meg Saksida looks at the payments on account regime and considers the implications of reducing them.
Payments on account (POA) have been around since the mid-’90s, when they were introduced to counteract the cashflow disadvantage HMRC had as a result of some taxpayers paying their taxes through self-assessment, which were due some ten months after the end of the tax year in which those profits were earned. In addition to the POA legislation, some 30 sections of the Taxes Management Act 1970 were either amended or introduced for imposing penalties associated with the regime.
These days, most practitioners understand the system well, but there may still be a few planning points to take on and pitfalls to avoid.
The current requirement for payments on account
Payments on account are payments of tax made in advance, and as such, are only required for
