Accounts and amounts

EVERY SO OFTEN it is good to be challenged in the things that you hold as fundamental. This happened the other day when I had a question on payments on account and interest charges. The situation was that Mr A was self employed and had a tax liability payable under self assessment of £2 600 for 2003-04. However his self employment ceased in that year and with no further tax liabilities in view (other than that deducted at source) an application was made to reduce the 2004-05 payments on account to nil. Subsequently an unforeseen chargeable event occurred in 2004-05 and this resulted in a higher-rate tax liability of £3 000. Payment of this amount was made on 10 January 2006 but HMRC charged interest which the agent then disputed.

When I was asked whether this charge was correct I immediately replied that it...