Is an online payment of tax to HMRC made on the date it is initiated or on the date it is received by HMRC?Wednesday, October 20th, 2010
In a decision given on 20 August 2010 (but only just published) in the case West v Revenue & Customs, the First Tier Tax Tribunal upheld a surcharge imposed on Mrs. West because an online payment of tax is treated as paid when it is received by HMRC, not when it is initiated by the taxpayer.
Mrs. West’s self-assessment tax payment was due on 31 January 2009. She made the payment online on Friday, 27 February, within 28 days following the due date, but it was not received into HMRC’s account until Monday, 2 March. A surcharge was imposed by HMRC as the payment was more than 28 days late. Mrs. West appealed against the surcharge on the basis that she had “paid” the tax within the 28-day deadline. She did not use the “reasonable excuse” provision for making the appeal.
The tribunal judge dismissed the appeal on the basis that the payment was still outstanding on the 29th day following 31 January, i.e. 1 March, even though Mrs. West had initiated it before that date.
Although this particular situation involved the payment of self-assessment tax by an individual taxpayer, it is relevant also to payments of PAYE tax and NICs by employers. With reference to the 3-day BACS cycle, HMRC warns, in the context of payments made by internet, telephone banking and BACS Direct Credit, that “it normally takes three bank working days for payment to reach HMRC” and that it may take even longer by some banks and building societies. An online payment initiated using any of these methods on a Friday should not be expected to be received by HMRC until the following Tuesday (Wednesday if there is a bank holiday Monday) at the earliest (although, for unexplained reasons, HMRC appears to have received Mrs. West’s payment on the Monday).
HMRC may be paid on the same day by CHAPS transfer but cannot yet be paid using the same-day Faster Payments Service. However, in either case, payments made by either of these two methods may still not arrive until the next banking day, depending on when they are initiated.