Personal tax is now so complicated that it can require a complex algorithm to work out the most beneficial off-set of allowances against classes of income for an individual taxpayer. We explained the problems this is causing in our newsletters on 30 March and 27 April 2017.
HMRC’s current work-around is to issue a list of SA exclusions for online filing. If the taxpayer’s circumstances fall within one of those exclusions, the SA tax return for 2016/17 should be filed in paper form, not online. HMRC has recently issued version 4 of this list (see below).
The list of exclusions covers much more than incorrect allocations of reliefs and allowances. For example, averaging for farmers and artists (exclusion no.61), and trade or property losses brought forward into 2016/17 (exclusion no. 58) may cause problems. If you have any unusual circumstances to report on their 2016/17 tax return, we will check the exclusions list before attempting to file online.
All software providers should have incorporated HMRC’s exclusions list into their 2016/17 tax return software, but as version 4 of this list was published on 19 June, it will take sometime for all tax return software to be updated. In the meantime, the advice from the professional bodies is to wait a few weeks before filing in paper form, as an electronic solution may become available.
HMRC has some other problems with its online SA Service. Taxpayers who access the service through the GOV.UK Verify (identity checking service), can’t request reductions to payments on account or set up a direct debit to pay their tax. A work-around is to set up a one-off tax payment through the taxpayer’s bank account, and used the paper form SA303 submitted by post to reduce a payment on account.