SAM2010 – Amend payment:
amend payments on account: calculation of payments on account
Application of the rules
Calculation of payments on account
1996/97 Transitional year arrangements
Basis for calculating the 1996-97 PoA
Notes:
Exceptions
The rules below describe the statutory basis for calculating
payments on account (PoA). These rules were modified, to
taxpayers’ advantage, for certain PoA set up manually and by
the computer for 1996/97.
Where modified rules were applied, and there is reason to
review the PoA because of a change in the amount payable for
1995/96, the PoA are
recalculated using thestatutory basis. Similarly, PoA are to be
calculated on a statutory basis when they are created manually
after a 1995/96 assessment is made.
Note: The split of the PoA should only be altered
where there is reason to revise the PoA. In all other instances
where taxpayers benefited under the modified rules, the PoA are to
remain unchanged.
The calculated PoA are half the previous year’s Tax and
NIC liability after the deduction of any
- Capital Gains Tax
- Tax deducted at source
- Underpayment transferred to PAYE
- SA Student Loan Repayments
Additional rules apply for 1996/97, the transitional year, and
these are explained below.
For the years 1997/98 onwards, PoA are calculated and
created automatically when
- The return is captured for the preceding year
unless the record is dormant, see section ‘Maintain Taxpayer
Record’ (
SAM101000 onwards), or
- A Determination, Revenue amendment (
SAM21020) or Jeopardy amendment (
SAM21010) is made for the preceding
year
Manual procedures exist for creating PoA when an SA year is
included in a contract settlement (
SAM31060) or where a discovery
assessment is raised (
SAM20010).
For 1996/97 where the 1995/96 Schedule A or D liability is used
as the basis for calculating the PoA, the following additional
rules apply
- The first PoA includes all tax arising under
Schedule D Cases III to VI and Schedule A unless exceptionally, a
Case V or VI source relates to earned income in which case the tax
is split evenly between the two PoA
- Higher rate tax on investment income is excluded
from the calculation
- Tax on income as a Member of Lloyds is excluded
from the calculation (but loss relief on underwriters sources,
allowed in a 1995/96 assessment, is recognised for the purposes of
calculating 1996/97 payments on account)
- Tax and NIC on Partners shares of Case I or II
profits from a pre-6 April 1994 partnership is excluded from the
calculation
The basis for calculating 1996-97 payments on account is the
1995-96 Tax and NIC liability on
- Schedule A or D assessments
- Direct Collection assessments
- Schedule E assessments giving rise to a Group F
underpayment (Tax on all other types of Schedule E income is
excluded from SA.)
When payments on account are calculated, amounts held over
either formally or informally are ignored. Once an assessment is
finalised, the payments on account are recalculated to take account
of the agreed 1995-96 liability.
- The calculated PoA are the most a taxpayer can be expected to
pay on account of the final liability for the tax year. There are
some exceptions (see below) where PoA are not required
- The tax and NIC split is not identified on the taxpayer record
and is not required for the purposes of collecting payments on
account
- Payments on account are not set up where the Last SA Return
Required for Year Ending 5th April signal is set to the previous
year or all the liability for the previous year is coded out
- Any amounts held over, either formally or informally, are
ignored and only the collectible amount(s) are used to calculate
the payments on account
- Any odd 1p is loaded on the second PoA
Payments on account are not required where
- The total calculated (1st plus 2nd payment on
account) from the liability for the previous year is less than
£500
- More than 80 per cent of the previous year’s
liability was suffered at source (this rule does not apply when the
liability for 1996-97 is calculated)
- There is an entry on the taxpayer record in the
Last SA Return Required for Year Ending 5th April field equal to
the previous year
- A foreign national is covered by a Tax
equalisation arrangement (Regulation 102 case), see business area
‘Returns’ (
SAM121620)
Note:
Payments on account, that total less than £500
after a claim has been processed,
are payable.
