P800 calculation, Travel and subsistence and umbrella companies: the SDC test, Partial exemption

Last week we took a look at the P800 calculation and why you should check  that your clients’ P800s are correct. We also explored changes to the travel and subsistence rules insofar as they affect workers who provide their services through umbrella companies. Finally, we took a look at the risk areas in relation to VAT returns for partially exempt clients.

This is an
extract from our topical tax tips newsletter dated 28 July
2016 (5 days before we publish an extract on this blog). You can obtain future issues by registering here>>>

P800 calculation 
HMRC’s annual PAYE reconciliation process for 2015/16 is now underway and your clients will be receiving their P800 calculations between now and November. As HMRC can and do make mistakes, it is important that you encourage your clients to pass their P800 on to you and that you check it to make sure everything is in order. During the reconciliation process, HMRC compare the tax that they think is due with what has actually been paid and send out a P800 to taxpayers who show and overpayment or and underpayment. 
So, what should you look for when checking the P800? 
The P800 shows the total income, which according to HMRC’s records, the taxpayer should have paid tax on. This will include wages or salary, any benefits in kind, any pension or taxable state benefits received and any interest on savings. Check the figures against the your client’s P60, P11D, bank statements etc to verify that they are correct. If the figures are wrong, you will need to tell HMRC. 
The P800 calculation may show that your client has paid too much or too little tax. There are various reasons why this may be the case and in checking whether the figures are right you should consider whether: ……….

This is an
extract from our topical tax tips newsletter dated 28 July
2016 (5 days before we publish an extract on this blog). You can obtain future issues by registering here>>>
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
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Tax refunds and forms P800, RTI penalties, HMRC forms

As the sun shines
merrily outside, the temperature of thousands of accountants is raised
by yet more incorrect tax computations, penalty notices and online HMRC

Last week we shared tips on how to deal with all of those: forms
P800, RTI penalties and an outlet for your frustration with badly
designed electronic forms.

Tax refunds and forms P800

HMRC has started the
end of year reconciliation process for taxpayers taxed under PAYE. This
involves sending a form P800 including a tax computation to those
taxpayers who have underpaid or overpaid tax for 2014/15. Remember you
won’t receive copies of your clients’ P800s, even if you have authority
to act, so ask your clients to pass on any P800 forms they receive.

Where taxpayers are
found to have overpaid tax for 2014/15 a cheque for the tax refund
should arrive about two weeks after the P800. The taxpayer doesn’t have
to request the refund. However, before cashing the cheque the P800
calculation should be carefully checked against the taxpayer’s form P60
or payslips for 2014/15.

You may remember that
last year HMRC issued a huge number of incorrect P800s (our newsletter:
16 October 2014). The cause of the 2013/14 errors was never officially
revealed, but many suspected the duplicate employment records created by
the RTI computer. The problem with duplicate employment records has not
been eliminated.

Taxpayers who have
underpaid tax for 2014/15 will also receive a form P800, showing the
amount of tax HMRC has calculated is due. It is even more important to
check any underpayment as the information reported on forms P11D, and
claims for business expenses to be deducted, may not have been processed
before the P800 was issued.

The Low Incomes Tax
Reform Group (LITRG) has reissued its guide on how to check a P800
calculation, which is very helpful. A key problem to look out for is the
amount of state pension. If 2014/15 was the first year in which the
state pension is received the amount on the P800 will be estimated, as
the DWP won’t have passed accurate figures to HMRC yet.

If you are completing
R40 repayment claim forms for your clients, note the address for
submitting those forms has recently changed (see link below). If the
taxpayer is not resident in the UK a form R43 should be used for the
repayment claim instead of an R40.

This is an
extract from our tax tips newsletter dated 18 June 2015. The newsletter
itself contained links to related source material for this story and the
other two topical, timely and commercial tax tips. 

It’s clearly written
and extremely good value for accountants in general practice. Try it
for free by registering here>>>