In seeking to register to file on line, the layman is told by HMRC he/she has to file
" if you receive other taxed income which cannot be collected through the PAYE system".
How is the layman supposed to know the answer to this question? Having been in practice for more years than I care to think about, I am not sure I know how to answer this, which assumes an intimate understanding of the PAYE system and HMRC Coding practice
How does HMRC justify such gobbledegook?
Replies (5)
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A tax return is required if HMRC Commissioners request you to do one or if you have untaxed income.
Not all income can be or is taxed through Pay As You Earn. In order for non employment income to be taxed through PAYE the tax code would have to be updated from the standard personal allowance. For a personal allowance of £11,500 ( divide by 100 for) tax code of 1150 would be applicable. The notice of coding from HMRC will identify what estimated income has been accounted through the tax code. So compare this to actual income.
But, notwithstanding the above, the answer to the question is, have you received income that has not been collected through PAYE (remember what changes are there from a tax code of 1150)?
You clients will know what income they have received; tax rules will not alter that.
Hope that helps.
One would hope even a layman might know if they have income that is not taxed (via PAYE or otherwise at source). If they do not know, then they may need an accountant.
I think the OP's point may be that HMRC's question is badly worded. It asks about income on which tax CANNOT be collected through PAYE. It should ask about income on which tax HAS NOT been collected through PAYE.
Quite possibly, agreed. However I used to get the dreaded "RTQ" written after my school homework answers. Do my best to avoid ever since. Regards.