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10 September 2013
Issue: 4419 / Categories: Forum & Feedback , Admin , Income Tax , Self assessment

A new client was substantially in arrears with his accounts and tax returns. These have now been brought up to date and returns been prepared for 2007/08 onwards. There is a loss for 2007/08, but HMRC are refusing to repay the payments on account for that year. Can action be taken to recover the tax?

We have recently been asked to act on behalf of a client who was in arrears with his tax affairs. To bring him up to date we have had to complete accounts covering the tax years 2007/08 through to 2011/12. The tax returns for each of the years have been submitted to HMRC and the tax position for each of the years 2008/09 and onwards have been agreed.

There is however a problem with 2007/08. The tax position for 2006/07 had previously been settled and the payments on account for 2007/08 were established.

However the 2007/08 return indicated a loss and we therefore asked for the tax position for 2007/08 to be cleared. Unfortunately HMRC have indicated that this will not happen and tax in excess of £25 000 will remain in place.

HMRC’s argument is that because the payments on account were not appealed...

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