In December I had a client who had a tax liability of just over
£2,000 arise on some one-off income, with the tax being due as a balancing
payment on 31 January 2014. She also has employment income and
dividends. It was envisaged that the tax liability arising be collected
via her tax code and therefore spread over 12 months.
HMRC have advised that because her tax liability would more
than double the tax collected via PAYE they were unable to collect via her tax
code and therefore the full amount was payable on 31 January. They also
advised that she should contact HMRC and do a time to pay arrangement spreading
the tax liability over 12 months which would have the same result as if it were
collected via Paye, albeit with interest on.
When my client contacted HMRC she was told that she could
not do a time to pay arrangement as she had assets and should sell her house to
meet the liability.
I ended up, understandably, with a distraught client on the
phone, a week before Christmas, with no idea where to turn, other than payday
With my intervention HMRC have now agreed to allow her 6
months to pay.
Has anyone else had experience of a heavy handed approach to small debts by HMRC, whilst other clients with larger older debts get ignored?