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Hi Mr. F6 Tutor,
I am not too sure about the payment on account and balancing payment of the individual tax administration. Based on the HMRC rule, shouldn’t the balancing payment an extra money that shouldn’t be paid by the taxpayer?
For example, the income tax payable for 2015/16 is 10000, and the income tax payable for 2016/17 is 12000.
1st POA for 2015/16 should be due on 31 Jan 2016, amount: 5000
2nd POA for 2015/16 should be due on 31 Jul 2017, amount: 5000
then on 31 Jan 2018, a balancing payment of 2000 (12000-10000) is due, plus the 1st POA for 2016/17 of 6000
and 2nd POA of 6000 for 2016/17 is due on 31 Jul 2018.
So now the total tax paid is 5000 + 5000 _+ 2000 + 6000 + 6000 = 24000
But the total tax payable for the two years are 10000 + 12000 = 22000
So if the taxman fleecing 2000 from this taxpayer?
Thanks,You have got your example wrong – the POA for 2015/16 are based on the tax payable for 2014/15 and the POA for 2016/17 are based on the tax payable for 2015/16. Your POA dates also include errors – think you need to go back to worked examples in the OT notes or in whichever study manual you are using!
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Hi Mr F6 Tutor,
I did read the BPP study text. I even watched study tutorials from two different sources: one is from Opentuition.
Maybe I was not clear. Let’s put the number based on your dates:
1st POA for 2016/17 is based on tax payable for 2015/16, which is 5000 on 31 Jan 2016;
2nd POA for 2016/17 is based on tax payable for 2015/16, which is 5000 on 31 Jul 2016.
Then on 31 Jan 2017, a balancing payment of 2000 is due, plus the 1st POA for 2017/18, which is 6000 based on tax payable for 2016/17.
On Jul 2017, a 2nd 6000 POA for 2017/18 is due based on tax payable for 2016/17.Whatever the years, the total tax should have paid is still 5000 + 5000 + 2000 + 6000 + 6000 = 24000
But the sum of the tax payable for 2015/16 and 2016/17 is 10000 + 12000 = 22000Why does HMRC demands this 2000 more?
Thanks.
Your POA dates for 2016/17 are still wrong and your reconciliation is NOT valid as you are comparing the tax payable figures for 2015/16 and 2016/17 with the POA made for 2016/17 and 2017/18 – of course they are different! Look also at the answer to your other question on this area regarding the sample paper for March / June 2017.
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