ATED payment problem caused by changing HMRC references
ATED payment problem caused by changing HMRC references
Fri 27 Apr 2018
An unheralded effect of the annual tax on enveloped dwellings (ATED) changing to its new online system has just emerged and may cause difficulties for taxpayers paying tax when or before they submit their returns if not handled properly.
Remember, the deadline for filing ATED returns and making payments is 30 April
Like any tax payment, ATED should be sent to HMRC using the correct payment reference but:
- the ATED payment reference is only generated when the return has been filed and accepted by HMRC’s system; and
- unlike past years, the ATED payment references do not remain the same from year to year.
The payment reference is only produced in response to filing of a return, so payments in advance of filing cannot be given the correct reference number. A payment made using the same payment reference as last year, in anticipation of submission of the return, will be treated as unallocated by HMRC.
This change is one of the few weaknesses of the otherwise much-improved ATED online filing system and it has not been well publicised. Corrective action to prevent or remove a penalty can require direct intervention with HMRC, giving full details of the payment made and reference used. If HMRC are not informed about the payment they may be unable to trace the payment and put a stop on any penalty notice.
There is another catch here because it isn’t possible to work out what the payment reference might be: under the old system the reference for an existing ATED payer remained consistent from year to year but the new references appear to be randomly generated and do not show any continuity.
Therefore if an ATED return is not ready for submission but payment is to be made to avoid a penalty the payment may still be made but it must be flagged as an ATED payment on account through HMRC’s ATED helpdesk.
Property owning companies that know they will have a liability for ATED but are unable to complete their return for any reason face the double jeopardy of penalties for both unfiled returns and unpaid tax, or for late compliance.
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