HMRC have released a new version of their Self-Assessment Exclusions for individuals. These are a list of scenarios that the HMRC system cannot cope with or will not calculate the correct tax liability for and therefore there is an exclusion in place to allow for these returns to be submitted by post instead of online.
HMRC have advised us that all Self-Assessment taxpayers need to file their 2016/17 Tax Return, pay their balance and make their first payment on account for 2017/18 by 31 January 2018.
They have confirmed that a “small number” of taxpayers are affected by the exclusions and therefore unable to file online or get an accurate income tax liability calculation for 2016/17. Their forecasts suggest that the exclusions for 2016/17 will only impact “a very small proportion of SA customers (a fraction of 1%)”.
In these instances taxpayers (or their agents) should:
• File a paper return, along with a completed reasonable excuse claim
• Make a reasonable effort to estimate the income tax liability based on the information they have
• Pay the estimated balance for 2016/17 and make their first payment on account of 2017/18 by 31 January 2018
Should the tax liability calculation for 2016/17 be too low or the deadline of 31 January 2018 be missed because of an exclusion, HMRC will not apply late filing, late payment penalties and/or interest. Automatic issue of these can be cancelled by a reasonable excuse claim.
From February 2018 HMRC will contact “customers” and their agents where they feel that the tax calculation needs to be corrected to confirm their actual income tax liability.
If you are uncertain as to whether or not your client’s circumstances match an HMRC exclusion and IRIS allows you to submit your client’s tax return online you should still file the return online, and pay the tax liability due.
HMRC have stated that they will:
• Identify any cases filed online where the calculation is incorrect
• Make any required correction to the income tax liability
• Inform the customer of the correct liability
• Advise when the revised amounts need to be paid
• Inform the customer that they will not have to pay late payment penalties and/or interest attributable to any additional amount arising from the correction if it is paid before the revised due date
In most cases, if your client’s circumstances fall into one of the HMRC Exclusions the IRIS software will warn you and advise that the Return be sent by post. There are some scenarios, only recently highlighted by HMRC that the software will not warn you about, but the Return will be rejected online with a 6492 error. In these circumstances the return should be sent by post accompanied by a reasonable excuse claim..
It’s all change this year, with the Spring Budget being replaced with a smaller Spring Statement. The main purpose of the Spring Statement is not to announce immediate tax changes or spending policies, it is to give the UK an update on the state of the economy and public finances. The Autumn Budget will now be the major platform for tax and spending changes being announced by the Chancellor.
13 March 2018 marks the date of the first ever Spring Statement, the Chancellor no longer appeared outside 11 Downing Street with his red box. Philip Hammond instead unveiled the latest economic forecasts in a short statement, predicted to be 15 minutes it actually lasted 29 minutes.
Here is a quick glance at the facts he highlighted during his speech; Current health of the UK economy:
- 3 million more people in work since 2010
- GDP growth forecast increased to 1.5% from 1.4% in 2018
- Employment growth predicted to be 32.7m by 2022, an increase of 500,000 from this year
- Inflation expected to return to 2% over the next 12 months
- Borrowing is forecast to be £45.2 billion this year, £4.7 billion lower than forecast
- 31 million working people paying less tax by the raises in the personal allowance
- Fuel duty frozen for the 8th year in a row
- National living wage will rise to £7.83 from 1 April 2018
- Business rates revaluation brought forward to 2021
- £95 million allocated towards full-fibre broadband for 13 areas across the UK
- Housing supply to raise to 300,000 per year by the mid-2020s with an investment of at least £44 billion
- 60,000 first-time buyers have already benefitted from the Stamp Duty relief announced in last year’s Autumn Budget
More importantly to accountants and businesses, the Spring Statement was an opportunity to announce some ‘hot topics’ the Government are seeking views on. These items will more than likely make an appearance in the Autumn Budget, so this gives a good guide to what changes the Chancellor is considering in the future.
- Reducing single-use plastic waste through the tax system
- Making sure multinational digital businesses pay a fair share of tax
- How to encourage cashless and digital payments while ensuring cash remains available for those who need it
- Extending the current tax relief to support self-employed people and employees when they fund their own training benefitting both individuals and the wider economy
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