Coding out self assessment balancing payment

When I read the Readers’ forum query ‘Self-assessment confusion’ (Taxation 4 March 2021 page 25) I was stunned. Unless the facts were not as portrayed the query revealed (or some would say further evidenced) a fundamental problem within HMRC that needs to be urgently addressed.

With the kind intervention of the Taxation editorial team and the assistance of the original querist I was able to examine the relevant correspondence (anonymised) to see what was really going on.

Original query

The original query concerned a penalty and interest charge imposed for the late payment of an individual’s self-assessment liability for the 2018-19 tax year. As the query pointed out the taxpayer’s liability for the year was £8 000 (in round terms). However payments on account meant that the balancing payment due on the following 31 January was (in similarly round terms) £2 500.

The taxpayer’s...