NIC continues, Tax repayments, and Trust registration service

In our latest tax tips email for accountants we said:

This week we have news about two matters which may be particularly relevant for your lower-earning clients: payment of class 2 NIC and tax refunds, although all self-employed clients will be affected by the national insurance developments. We also have an update concerning access to the trusts registration service.

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 repayments

The first tax returns to be submitted in the tax return season are normally those which are likely to generate tax refunds for taxpayers who really need to money. However, the tax may not be repaid in the manner requested, due to HMRC’s policy regarding credit and debit cards.

Where the most recent tax payment was made by a credit card, the tax refund will be made to the same card, even if that card is not held in the taxpayer’s name. This is in line with banking industry standards for making refunds, for example when returning purchased goods to a shop.

The tax refund will be directed to the card only if tax has been paid using that card within the last nine months. Also, the total value of the tax refunds (if more than one) cannot exceed the amount of tax paid with the card.

Where the taxpayer has requested that the tax is refunded into his bank account, that request will be ignored by HMRC if the conditions for a repayment to a credit or debit card are met. This means that where the taxpayer has an outstanding debt on their credit card the tax refund will be set against the amount outstanding, and won’t be available to be spent on other things.

You need to advise your client of HMRC’s tax refund procedure, as the cash may not be available to pay your fees where the repayment goes directly to a credit card.

PAYE debts, Tax payments or repayments, Non-resident landlords

Next week, once the dust has settled, we will analyse some of the most urgent tax changes announced in the Autumn Statement. In the meantime we have tips on how to deal with phantom PAYE debts, and a practical issue concerning the SA tax payments and repayments due in January. There are also new forms and new guidance for non-resident landlords.

This is an
extract from our topical tax tips newsletter dated 26 November 2015
(5 days before we publish an extract on this blog). You can obtain future issues by registering here>>>

Tax payments or repayments 
Helping clients with their tax affairs involves more than just computing the numbers. Many individuals need support with budgeting to pay their tax liabilities, and reminders about when and how to pay. 
January is probably the worst month in which to find the funds to pay tax bills. Many small businesses see a reduction in trade after Christmas, and the weather can discourage customers. New businesses may have to find 150% of their annual tax liability, if the individual was previously taxed under PAYE. These problems can lead to taxpayers reaching for their credit cards to pay the tax due.       
If they do pay by credit card, there is a non-refundable fee of 1.5% of the amount paid. Payments by debit card don’t attract a fee. But a debit card can’t be used if the funds or overdraft facility don’t already exist in the taxpayer’s bank account.   
A taxpayer facing a significant tax bill on 31 January 2016 may want to spread the bill over several credit cards. However, from 1 January 2016 HMRC will restrict the number times debit or credit cards can be used to pay the same tax bill. HMRC hasn’t indicated the maximum number of card transactions which will be permitted against each tax bill. 
If the taxpayer needs to spread their self-assessment tax bill over several months, the HMRC budget payment plan should be considered. But this requires forward planning as all self-assessment debts must be paid before starting on a budget payment plan. 
When your client is really stuck for funds, they can to ask HMRC for a time to pay arrangement before the due date for the tax arrives (or you can do this for them), by calling the business payment service: 0300 200 3825. 
Where your client is due a repayment of tax from their SA tax return, HMRC want to make that repayment electronically directly to the taxpayer’s bank account. This is only possible if the bank account number and sort code have been accurately recorded on the SA tax form. 
A new feature in the HMRC software for completing SA tax returns now checks that the bank sort code entered is a valid sort code, and that the format of the account number entered is correct. An error message will ask the preparer to check and amend the entries if a fault is detected. 
This is an
extract from our topical tax tips newsletter dated 26 November 2015
(5 days before we publish an extract on this blog). You can obtain future issues by registering here>>>

full newsletter contained links to related source material for this
story 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>>>

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>>>