Last week we told you about errors on taxpayers’ statements as the payments on account due for 2018/19 were missing. This issue has still not been resolved.
This week the HMRC computer has randomly recategorized some Scottish taxpayers as English residents, and treated certain English taxpayers as if they were Scottish taxpayers. This matters, as from 2017/18 the income tax bands for non-dividend and non-savings income are different for Scottish taxpayers, as opposed to taxpayers who are resident in England or Wales.
Double check the tax calculations if you are resident in Scotland. Also check the tax calculations if any of our clients have any Scottish source of income, such as a pension paid by a Scottish based pension provider.
Perhaps the HMRC computer over-indulged in the Hogmanay celebrations, as on 2 January it had a bit of a headache. It appears that trust tax returns submitted online on 2 January 2019 were recorded as paper tax returns, and penalties were issued for late filing of those returns. HMRC has said that all the affected returns have been identified, and the penalties have been cancelled. If an incorrect penalty is still showing on your account you need to contact HMRC.
Where a tax return was submitted on paper because it falls within one of the exclusions for 2017/18, check that it has been processed correctly. In some cases pages have been overlooked and completed boxes missed.
Another problem is related to coding-out of the 2017/18 balance of tax due. Where a coding-out in the 2019/20 PAYE code is requested on a tax return submitted before 31 December 2018, it should be actioned, but in some cases it has not been.
If you have had a chargeable event gain in 2017/18 or an earlier year, you will want to check HMRC’s calculation of any top-slicing relief. Also pay particular attention to any subsequent coding adjustments. The HMRC computer assumes that chargeable events repeat every year, when they generally do not.
Written by the Tax Advice Network