I have been going round in circles on this and would appreciate any comments!
New personal tax client, income is say £70k employment, £500 int, £1k div's.
2012/13 has made capital gain so has registered to file tax return. Client asked for review of prior year (2011/12) to check everything is in order.
I have run calculations and there has been a small underpayment of tax for 2011/12.
What is the best course of action - write to HMRC? Prepare a tax return for that year (if so, would there be fines?).
He has had tax reviews from HMRC in the past and declared everything when asked but has never been sent a tax return to complete. Most recent correspondence was in Jan 2012 where he informed them of 2010/11 income. When he phoned them to ask if they needed anything else they told him they would be in touch if they did, but he has not heard since.
Many thanks in advance!
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Large increase?
What is the small underpayment - if the figures you show are net the hr tax would be nearly £400. There is a tolerance level for underpayments but it is not that high. He does not fit the criteria for SA so I assume that there has been a coding restriction for these years? ?If so, and they have not yet contacted re 11/12 the chances are that they have decided not to review so I would leave well alone. When processing the next return someone may look back so if the interest has grown because of the capital received make a white space note to pre-empt the question
The tax code was restricted in 2011/12 so the underpayment is smaller than £400. Probably about half that.
Although I would like to leave alone I would not really be comfortable to advise that on this client (for many reasons which I won't go into here), unless 100% legit to do so.
Any idea what the tolerance level is?