In our latest tax tips email for accountants we said:
Halloween normally marks the end of the paper tax return filing season, but this year that may not be the case. HMRC has amended its software to allow more tax returns to file online, but problems remain. We have some good news concerning late submission of NRCGT returns. Finally, the fees for supervision under the money laundering regulations are increasing, which may impact your practice and some of your clients.
Below is just an extract from that email. To receive the full email when it is published each Thursday, simply follow the link on the right (or below, if you’re reading this on a mobile device)
Tax return online filing
HMRC implemented an in-year fix to the official 2016/17 personal tax calculation on 23 October, and all tax return filing software should now have been updated to align with the new version of that tax calculation.
Contact your software provider if you haven’t received a notice to update since 23 October, but beware of links in emails which may be spoofs from software companies. The fraudsters are keen to gather login details from accountants in this way.
The revised tax calculation should allow SA tax returns to be submitted online which fell into exclusions numbered: 48 to 56 and 58 to 59 (see exclusion list version 7). This should cover the majority of the excluded tax returns. However, the exclusion list has been extended by four more categories which came to light due to work on the tax calculation fix.
There are also significant problems with exclusion number 68 which concerns the reallocation of the savings rate band and personal allowance where there is significant dividend income. Software providers have found it very difficult to program this wide exclusion. As a result, their software may block online filing of tax returns based on exclusion 68, when in fact the revised tax calculation would produce the correct result, and online filing should be permitted.
For most of the live exclusions HMRC has provided an estimate of the amount of tax which would be overpaid if the tax return is submitted online. This is useful as you can have a sensible conversation with your client about the amount of tax at stake versus extra costs for submitting a paper tax return.
Where tax returns have already been filed on paper or online, HMRC will review the tax computation and amend it where necessary to align with the fixed version of the tax calculation. If an adjustment is needed, the taxpayer, and you as their agent, should receive a revised SA302 computation and a letter advising of the correction.