Every week we endeavour to find three practical tax points which are relevant to your practice. This week we have uncovered a new form of tax assessment which can be issued for 2016/17 onwards, and changes to the NIC regulations for overseas and offshore workers. We also alert you to a new version of the tax advisers’ code of conduct: Professional Conduct in Relation to Taxation (PCRT).
This is an
extract from our topical tax tips newsletter dated 3 November 2016 (5 days before we publish an extract on this blog). You can obtain future issues by registering here>>>
Simple assessments
Do you remember how personal tax worked before self-assessment? The Inland Revenue would raise an estimated tax assessment; the taxpayer would appeal, a taxreturn would be submitted and eventually the figures would be agreed, then the taxwould be paid. HMRC seem to have turned the clock back to pre-SA days with a new power to raise ‘simple assessments’, from 15 September 2016 (FA 2016, Sch 23, s 167).
A simple assessment is made by HMRC not by the taxpayer, so it is the opposite of a self-assessment made alongside a SA tax return. HMRC can raise a simple assessment when it has information that the taxpayer has received income or gains which are not taxed under PAYE, but that taxpayer hasn’t submitted a SA tax return for the year, and is not due to submit a SA tax return.
HMRC envisage that simple assessments will be used where the taxpayer’s main source of income is taxed under PAYE, but he also has up to £10,000 of other taxable income or gains. This income threshold is not set in the legislation.
The taxpayer will have 60 days to query the simple assessment or such longer period as HMRC allow. The tax due will be payable by 31 January after the tax year end, or if the simple assessment is issued after 31 October following the tax year, the tax will be payable three months after the date of the assessment. The taxpayer will not have to make payments on account after receiving a simple assessment, as would be the case when making a SA tax return.
It is likely that any explanation of the tax demanded on a simple assessment will only be available in the taxpayer’s personal digital tax account, which you may not have access to. There is no guidance available from HMRC about how simple assessments will work in practice, but HMRC does have the power to raise them for 2016/17 and later years.
If you come across a simple assessment, do contact one of our personal tax experts for guidance.
This is an
extract from our topical tax tips newsletter dated 3 November 2016 (5 days before we publish an extract on this blog). You can obtain future issues by registering here>>>
The
full newsletter contained the remainder of this item plus links to related source material and the
other two topical, timely and commercial tax tips. We’ve been
publishing this newsletter weekly since 2007; it’s clearly written
and focused on precisely what accountants in general practice need to
know about each week. You can obtain future issues by registering here>>>