The money is not lost, but it may sit on the wrong tax, the wrong period or even someone else’s record while interest and penalties build on the bill you meant to pay. Ask the helpline for that tax to move it as soon as you notice. Where HMRC moves a payment to where you originally intended, it is normally treated as paid on the original date, which puts the interest right; the risk grows the longer the error is left.

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What happens to a payment made with the wrong reference?

Every HMRC payment page carries the same warning: if you use the wrong reference number, your payment may be delayed or used to pay a different tax bill that you owe. What actually happens depends on what the wrong reference points to.

  • A valid reference for another of your charges. The payment is credited there. If that charge is already paid, the excess sits as a credit; meanwhile the bill you meant to pay shows as unpaid.
  • A reference that matches nothing. HMRC’s Debt Management and Banking Manual at DMBM210155 explains that the Self Assessment system only accepts payments that match a record, and redirects unmatched payments to a separate overpayments account, from which staff transfer them on. There is no facility for moving a payment directly between two Self Assessment records; it has to go through that account.
  • Someone else’s reference. The money is credited to their record, and can even be repaid to them, which is the hardest case to unwind.

Where the reference is incomplete but the intention is obvious, HMRC can act on it. DMBM210110 says that if a payment has no correct and complete reference but there is an implied direction, for example an outstanding liability matching the payment amount, it is allocated to that liability. Do not rely on this.

Which reference mistakes are most common?

  • Corporation Tax. The 17 character reference changes for each accounting period. GOV.UK warns that if you saved HMRC as a payee, your bank keeps the reference you last used and you must update it, so a payment for this year can be credited to last year.
  • PAYE. Early or late payments need four extra digits after the 13 character accounts office reference, showing the tax year and month. Getting them wrong can put the payment against another month.
  • VAT penalties. A VAT bill uses the 9 digit registration number, but a surcharge or penalty uses a 14 character reference starting with X.
  • Self Assessment. The reference is the 10 digit UTR followed by K. Using a spouse’s or a partnership’s UTR, or a company UTR, sends it to the wrong record.

The reference formats for every tax are set out in how to pay HMRC.

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How do you get HMRC to move the payment?

GOV.UK names the contact for each tax: Self Assessment general enquiries, Corporation Tax general enquiries, VAT general enquiries, or the employer helpline for PAYE. Before you call, gather:

  • the date, amount and method of payment;
  • the reference you actually used and the reference you should have used;
  • the charge or period you intended to pay; and
  • a bank statement or payment confirmation showing the payee and reference.

First check your HMRC online account. For Self Assessment, GOV.UK says that if you cannot see the payment after 7 days you should check with your bank that it was sent; for Corporation Tax it says the account should update within a few days of HMRC receiving the payment. If HMRC cannot find the payment, its missing payment guidance at DMBM217000 says the onus is on the customer to provide evidence that it was made, which may mean getting copies of records from your bank.

Does moving the payment put interest and penalties right?

Usually, if the money stayed with HMRC on your own record.

  • Self Assessment. SAM110144 says that where a payment made in error is reallocated to where it was originally intended, the effective date of payment is the original date of the payment.
  • Interest review. DMBM405090 says that where it is proved that a payment was not allocated in line with your original instructions, reallocating it automatically corrects the interest position.
  • Corporation Tax. COM122050 recognises that a payment intended for one accounting period may be credited to an earlier one, for example because the company used the wrong payslip, and that the money is later reallocated to the correct period. It also warns that the system can wrongly credit repayment interest when this happens, which HMRC will correct.

Because penalties for late payment are based on what is unpaid at set dates, a payment treated as made on its original date should also remove a penalty calculated on the same tax. Check the revised statement rather than assuming it. If a penalty remains, ask for it to be reviewed; see reasonable excuse for the grounds.

The position is weaker when the money has left HMRC. DMBM405090 deals with a payment meant to be split between several taxpayers, for example partners, but credited to one record and then repaid. Where that happened because the customer or agent used the wrong payslip, interest is upheld; where the correct payslip or information was given, the original payment date is used and the interest given up. Where HMRC credited another customer in error and repaid them, a specialist team gives the right customer a credit dated to the original payment and asks the other customer to return the money.

What if HMRC has already used the money for another debt?

Act quickly. DMBM210105 says that where HMRC chooses the allocation, you can ask for it to be changed at any point until HMRC tells you how it allocated the payment. After that, or if you chose the allocation at the time of payment, both sides are bound. DMBM210120 adds that there is no right of appeal against payment allocation and that requests made only to reduce interest are refused, unless you gave a specific instruction when you paid and there is clear evidence of it. Evidence made at the time, such as a payment confirmation for an amount that matches the bill, a covering letter or an email to your agent, helps show what you intended. The general rules are in how HMRC allocates payments.

How might this play out?

Illustration only. A company with a 31 March year end pays £18,000 of Corporation Tax on the due date for the year to 31 March 2025, using a saved payee that still holds the reference for the year to 31 March 2024.

  • The earlier year was already paid, so the £18,000 shows as a credit on that period, and the online account shows the latest year as unpaid, with interest running.
  • The finance director notices a reminder six weeks later, calls Corporation Tax general enquiries with the bank confirmation, and asks for the credit to be moved to the period ended 31 March 2025.
  • Once it is moved to where it was intended, the interest shown on the later period should fall away. The director checks the next statement to confirm it has, and updates the saved payee.

What mistakes make things worse?

  • Paying the bill a second time with the right reference before the first payment is traced, leaving a duplicate to be reclaimed.
  • Ignoring reminders on the assumption HMRC will notice; it often cannot tell what the payment was for.
  • Not keeping the bank confirmation, which is the evidence of your original instruction.
  • Leaving a payment on another person’s reference, where it may be repaid to them.
  • Assuming the problem is fixed without checking that interest and penalties have been recalculated. See also part payments to HMRC if only some of the bill was paid correctly.

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Sources

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 24 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.