Simple assessment: the end of the tax return?

HMRC are removing the need for some groups of taxpayers to submit annual tax returns and instead will assess tax liabilities from information provided to them by third parties. While this may simplify the tax compliance burden for these groups, the time limits to appeal the assessments are very short and inflexible.
HMRC believe that their systems for obtaining taxpayers’ income details directly from employers, banks, stockbrokers etc. are now at the stage where there is no longer the need for taxpayers with simpler affairs to report their income on tax returns.

With all this information in their possession, HMRC can instead issue a taxpayer with a “Simple Assessment” requesting payment of any additional tax not already deducted at source from the income via PAYE, etc.

HMRC are intending to issue the first batch of these Simple Assessments over the coming weeks to two main groups of taxpayers:
  • New state pensioners with income more than the personal allowance in 2016/17.
  • PAYE taxpayers who have underpaid tax and who cannot have that tax collected through their tax code.
The assessments should show a statement of income, a calculation of the tax liability and details of how and when to make the payment.

Over time, it is expected that more groups of taxpayers will be transferred into the Simple Assessment system.

What are the taxpayer deadlines?

While there are no effective time limits setting out when HMRC can issue the assessments, or how quickly they must respond to queries, taxpayers have only 60 days from issue date to query a Simple Assessment, and then only 30 days to appeal if they disagree with HMRC’s response to their query. If these deadlines are missed then there is unlikely to be any way for the taxpayer to challenge the assessed tax liability.

In addition, the HMRC guidance on the scope, administration and practicalities of this entirely new system is brief to say the least, amounting to little over a page of notes. So any taxpayer who receives a Simple Assessment that they do not agree with, will be facing unchartered waters when contacting HMRC.

We are happy to assist any taxpayers who receive a Simple Assessment that they want us to check or query with HMRC. Given the strict time limits for queries and appeals, early action after receiving an assessment is essential.

This article was taken from the Winter 2017 issue of the Private Client team's Quarterly Tax Digest. You can access all the other articles here.
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