Whilst the tax office might be trying to get us all to go digital, it has decided to revert to paper for issuing new simple assessments. They will be hitting the doormat shortly.

We have previously mentioned that the tax office computer cannot currently cope with the complexity of the tax system in certain scenarios, thereby forcing people to file paper tax returns, but the tax office is now going one stage further and bringing back the pre-self-assessment regime of paper assessments.

From September 2017 simple assessments will demand tax that cannot otherwise be collected through Pay As You Earn (PAYE), and without the taxpayer having to complete a return. If a return has been requested, that request will have to be withdrawn before the simple assessment is issued.

A simple assessment is most likely to be issued where the taxpayer is already subject to PAYE, but has a small amount of other taxable income or gains, or where tax underpaid cannot be coded out.

H M Revenue & Customs (HMRC) has up to four years from the end of the tax year to issue a simple assessment.

All existing state pensioners who complete a tax return because their state pension is more than their personal allowance will be removed from self assessment in tax year 2018/19. HMRC will instead use data it already holds and calculate what tax is owed, though that data may not always be accurate.

It is understood that around 1.7m pensioners who are currently required to file a return could be removed from self assessment under the new system.

Higher rate tax payers under PAYE that additionally receive other income from various sources that is untaxed could also eventually be switched to simple assessments.

Taxpayers with complex tax affairs are unlikely to be moved onto simple assessments at any stage in the future.

Appeals and payments

A taxpayer that receives a simple assessment should check it, as they will only have 60 days to query it, though HMRC can allow a longer period. In the absence of any contact from the taxpayer, once the assessment becomes binding the tax is payable, so it is important to make sure the assessment is right as HMRC’s data is frequently not correct.

The tax is payable on the normal due date of 31 January, so for the tax year ended 5 April 2017, the tax is payable by 31 January 2018. However, if a simple assessment is issued for the year to 5 April 2017 after 31 October 2017, the tax will not be payable until three months after the date of the assessment.

There are no payments on account to make under the simple assessment procedure.

With HMRC shelving its Making Tax Digital project for income tax until at least 2020, on-going computation problems with its computer, and now the re-introduction of paper assessments, the tax system is anything but simple.

If you receive a simple assessment, or would like to talk to someone with regards to your personal tax affairs, please contact a member of our Personal Tax team.


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