Freelancers that miss second payment on account could trigger an HMRC investigation

By Staff Reporter Last updated Jul 17, 2025

Photo by Mikhail Nilov via Pexels

Millions of self-employed individuals in the UK, from seasoned freelancers to new side-hustlers, face the second Payment on account deadlne on 31st July. For those with a tax bill exceeding £1,000, this payment acts as an advance towards next year’s tax liability, effectively spreading out tax payments and allowing HMRC to collect tax earlier.

While the primary consequence of missing this deadline is immediate financial penalties, there’s a more significant, long-term risk: an HMRC investigation.

The snowball effect of late payments

Tax insurance specialist Qdos highlights that ignoring the Payment on Account deadline can quickly escalate into more serious issues. Firstly, HMRC levies an 8.25% interest charge on overdue tax, which can accumulate rapidly. However, the financial penalty is just one part of the problem.

According to Seb Maley, CEO of Qdos, late payments are a major red flag for HMRC. He explains that “missing the Payment on Account deadline can easily snowball into bigger problems. You also run the risk of being investigated by HMRC – late payments are one of the many red flags that the tax office looks out for.”

Why are so many affected?

The relatively low threshold for Payment on Account means it impacts a vast number of taxpayers. This includes full-time freelancers, small business owners, and the increasing number of people with side hustles, many of whom may be new to the complexities of self-assessment and advance tax payments.

With HMRC having access to more data, information, and sophisticated tools than ever before, tax compliance is at the forefront of the Labour Party’s agenda. Missing deadlines not only incur interest charges but also increase the likelihood of your tax affairs being scrutinised more closely.

However, many freelancers have been posting their concerns on LinkedIn about clients not paying on time, leaving them out of pocket and in debt to pay for essentials.

Protecting yourself from scrutiny

Staying on top of your tax obligations and making your Payment on Account on time offers not only peace of mind but also significantly minimises the risk of facing an HMRC investigation. In an era where HMRC has enhanced capabilities to identify discrepancies and non-compliance, proactive management of your tax affairs is the best defence.

If you’ve missed the 31st July deadline, you should consider making the outstanding payment as soon as possible to mitigate further penalties and reduce your risk of attracting unwanted attention from HMRC.

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