Hi can anyone help please?
I have overpaid income tax in previous tax year and HMRC issued a credit on PAYE account.
This happened because of salary reductions mid year which resulted in income tax being negative for a few months and as a result I had to repay income tax to employee and HMRC issued me with a credit on PAYE account.
After the PAYE journals have been made I ended up with PAYE in Current Assets on the balance sheet similar to this:
- 2220 (Net Wages) credit 1450
- 7001 (director’s salary) debit 1000
- 2210 (PAYE) debit 450
Now on the following year months HMRC has been using this credit to cover the PAYE liability, however later after the credit was almost used the normal PAYE liability started to be issued even though there should still have been some of the credit left. I am ok with them not using credit anymore however there is still some credit left and it is still left in my balance sheet. Not sure why HMRC not used up all of the credit before starting to bill me for PAYE again.
As soon as HMRC stopped using credit to cover PAYE I started to make PAYE payments again as requested.
What to do with the amount of credit left and is there a way to remove it from the balance sheet assets somehow?
Was it a correct way to account for credit on PAYE account issued by HMRC?
I would appreciate any help.