If an HMRC enquiry looks likely to end with more tax to pay, you can make a payment on account before the figure is agreed. Late payment interest stops running on the amount you have paid, the payment does not commit you to HMRC’s figures, and HMRC’s Enquiry Manual says the money is repayable on request as long as you owe HMRC nothing else.

What is a payment on account during an enquiry?

It is a voluntary payment towards tax that has not yet been charged. HMRC calls it a general payment on account, and it is not the same as the Self Assessment payments on account due each January and July. EM1936 tells officers that once they have established additional tax and National Insurance is due, but before they have finished their enquiries, they should normally ask for a payment on account. They should not ask for more than the extra tax already established, but may ask for further payments as the enquiry progresses.

The money is held on HMRC’s Strategic Accounting Framework Environment (SAFE), a system for miscellaneous charges, against a 15 character SAFE customer reference that the officer arranges (EM1938).

Why pay before the amount is agreed?

Mainly to stop interest. Interest on Self Assessment tax runs from the original date, not from when the enquiry ends. EM4010 explains that for balancing payments the relevant date is 31 January after the end of the tax year, and that even tax on a discovery assessment issued years later carries interest from that original relevant date. Enquiries can run for months or years, so interest builds up throughout.

EM1936 says a payment on account reduces the amount payable at the end of the enquiry because interest ceases to accrue on the amount it covers, and officers should make taxpayers aware of this. HMRC’s late payment interest rate is the Bank of England base rate plus 4%, a margin that has applied since 6 April 2025 (it was base rate plus 2.5% before then). For Income Tax, National Insurance and Capital Gains Tax the published rate was 7.75% from 9 January 2026. See HMRC late payment interest.

Payments on account have only a limited effect on penalties. EM1936 says that for periods before the current penalty rules in FA 2007 and FA 2008, a payment on account is taken into account in the abatement for cooperation, but for penalties under Schedule 24 FA 2007 or Schedule 41 FA 2008 the reduction for quality of disclosure is not affected by payments on account.

How do you make the payment?

Ask the officer for the payment reference in writing. EM1938 says the reference must not be given over the phone or at a meeting unless it has already been issued in writing, so that payments are never accepted without HMRC’s disclaimer. Use it only for this payment: anything paid with that reference can only be accepted as a payment on account.

The gov.uk guide Pay taxes, penalties or enquiry settlements applies to references of 14 or 15 characters beginning with X. You can pay by approving a payment through your online bank account, by debit or corporate credit card (with a non refundable fee; personal credit cards are not accepted), by Faster Payments, CHAPS or Bacs, or by cheque made payable to “HM Revenue and Customs only” with the reference written on the back. EM1939 says it is HMRC policy not to accept cash. For general payment methods see how to pay HMRC.

Does paying mean you accept HMRC’s figures?

No. Where a payment arrives unexpectedly, or you ask for a reference, EM1941 requires the officer to send a letter containing a disclaimer that makes clear:

  • the payment will only be accepted as a payment on account;
  • paying does not mean HMRC agrees with the amount you owe;
  • accepting it does not imply agreement to settle on your terms or acceptance of any offer you have made;
  • it does not commit you or HMRC to any course of action, so if HMRC issues a decision you disagree with you can still appeal.

EM1938 adds that officers must tell you that receiving a payment on account does not commit HMRC to any particular course of action. If a payment is described as being “in full settlement” of the enquiry, EM1941 sends officers to separate contract settlement guidance, so avoid that wording unless you mean it.

Can you get the money back?

Yes, in principle. EM1937 states that a general payment on account is repayable at the taxpayer’s request, provided there are no other outstanding debts to HMRC. If there are, HMRC reallocates the payment to those debts and must explain how it has done so. Two practical points follow:

  • HMRC can lock a payment on account in SAFE where there is a clear reason, for example a risk that it could be set against a future charge before the enquiry ends, other open enquiries, or concerns about the customer’s behaviour or history. The standard lock is 30 days, and officers can ask for a longer one (EM1939).
  • Money you take back no longer covers the eventual liability, so it no longer stops interest on that part of the tax.

Where payments on account turn out to exceed the final settlement, EM1939 says HMRC checks for other collectible debts and, if there are none, repays the excess.

What happens when the enquiry ends?

For an enquiry completed by a closure notice, EM3965 tells officers to transfer the payment from SAFE back to your Self Assessment record before amending the return, so the notice shows an accurate figure of tax still to pay and the system does not issue statements that ignore your payment. Officers must also check that a “no repayment” signal is set on the record, which EM3965 says should already have been set when the case was selected for enquiry, so the money is not repaid in error. For cases settled by contract settlement, EM1939 points officers to separate guidance on dealing with payments on account in the settlement.

When will HMRC not ask for a payment?

EM1940 says that where fraud, dishonesty or deliberate behaviour is suspected and the case meets the criteria for referral to HMRC’s Evasion Management Team, the officer must not request payments on account until that team says the enquiry can proceed, because a request could prejudice a criminal investigation. If you still want to pay, HMRC must make clear in writing that accepting the payment is without prejudice to its right to undertake a criminal investigation, and you must confirm you understand.

At the other end, if you decline to pay voluntarily and significant additional liabilities have clearly been established, EM1936 says the officer should consider a jeopardy amendment or discovery assessments, which create a formal charge.

Worked example

Illustration only. In March 2026 an enquiry into a sole trader’s 2023 to 2024 return establishes at least £8,000 of extra tax, but the full amount is disputed. The balancing payment date for that year was 31 January 2025, so interest on the extra tax has been running since then.

  • The trader pays £8,000 on account on 1 April 2026. Interest on that £8,000 stops at that date.
  • The enquiry closes in April 2027 with £10,000 of extra tax agreed. Interest runs on £2,000 from 31 January 2025 until it is paid, but on the £8,000 only from 31 January 2025 to 1 April 2026.
  • Assuming a flat rate of 7.75%, a year’s interest on £8,000 is £620, which the early payment avoids.

Had the enquiry closed at £6,000, the £2,000 excess would be repayable once HMRC had checked for other debts. If the obstacle is cash rather than the dispute, see Time to Pay arrangements.

What mistakes do people make?

  • Waiting for the final figure before paying anything, while interest runs from the original due date.
  • Paying with the wrong reference, so the money is allocated somewhere else or delayed.
  • Describing the payment as a full and final settlement when it is not intended as an offer.
  • Paying more than seems likely to be due without considering whether HMRC can lock or reallocate it to other debts.

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Sources

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 19 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.