ECH22010 - Settlement: Payment on Account
Payments on account of a Class 6 settlement should be sought where
- (This text has been withheld because of exemptions in the Freedom of Information Act 2000)
- PAYE, NICs, CIS deductions might be at risk because of the employer's or contractor's uncertain financial position
- a review is complete except for an outstanding point which may delay settlement for some time
- the employer or contractor has requested time to pay
- it has been established that there is a liability which will give rise to an interest charge.
The ECO should
- not refuse a payment on account if offered spontaneously even if it is not within the circumstances above
- point out that the advantage of making a payment on account will be to minimise the interest accruing
- take care not to accept a payment on account which may be more than the probable duties in the eventual settlement
- treat any payment on account as first clearing any interest bearing liability
- include the full circumstances of the payment in the review papers and, where appropriate, the notes of meeting.
- make it clear, and follow up in writing, that the payment is accepted without committing the Board to any particular action for example,
- “I acknowledge receipt of the payment of £……. on ……. . As discussed at our meeting on ……., it is accepted as a payment on account only and without committing the Commissioners for HM Revenue & Customs to any particular course of action when the case is reported to them.”
Spontaneous payments on account are not uncommon. Always scrutinise any covering letter carefully in the light of EM1937.
