HMRC contacts SA clients claiming exceptional days

HMRC is contacting people who claimed exceptional days on their 20/21 Tax Return. Enquiry window?

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In October 2022 six of our clients working abroad have had letters from HMRC pointing out they have claimed to have exceeded the permitted UK days due to exceptional circumstances in 2020/21.  In each case we were careful that the relevant tests weremet.  The letter advises them to check the return entries were in order, if so no action required.  If not, they are to amend their return.

In some cases this letter is well outside the 12 month window HMRC has for raising an enquiry into a return.  The letter is not an enquiry.  It seems to me that unless HMRC has a "discovery" they can make, this is just a scary letter which can be ignored.

I find it odd that HMRC writes to people when the enquiry window has closed.

Questions:

1. Are other agents receiving these letters for non-resident clients who put entries in the exceptional days boxes 11 or 11.1 on 2020/21 Returns?

2. Do readers agree that if the 12 month enquiry window (from date return filed) has closed, HMRC can take no further action unless they make a "Discovery".

NOTES

The content of the letter is online, and also reproduced below, so the link is as follows, and the text below

 HMRC Non-residency Exceptional Days letter Oct 2022

Please check the residence pages on your 2020 to 2021 Self Assessment return Our records show that you included days spent in the UK on your 2020 to 2021 tax return that you believe were for: • exceptional circumstances (box 11 on the SA109) • coronavirus (COVID-19) related work (box 11.1 on the SA109) We’ve been seeing common errors in Self Assessment tax returns relating to boxes 11 and 11.1 on the SA109 pages. We need you to check the information on your 2020 to 2021 return is correct. You need to do this within 60 days of receiving this letter. This is not a compliance check. We want to help you get things right and give you the opportunity to correct any errors. What you need to check We’ve seen that some customers have included days: • in box 11 ((SA109) ‘Residence, Remittance Basis etc. supplementary pages’) that are more than the 60-day limit for a single tax year for exceptional circumstances • in box 11.1 ((SA109) ‘Residence, Remittance Basis etc. supplementary pages’) that are more than the 57-day limit for the 2020 to 2021 tax year for coronavirus (COVID-19) related work – the period for including this is 6 April 2020 to 1 June 2020 only Our records show that at least one of the above errors is shown on your tax return for the 2020 to 2021 tax year. Please check that you • have not included days on your tax return that go above these limits • meet the conditions for exceptional circumstances or coronavirus (COVID-19) related work for each day included on your tax return If you find any errors, you’ll need to amend your return and look again at your residence position. This is a complex area of tax and you may want to ask a professional tax adviser for help. How to check You can find more detailed guidance on exceptional circumstances in the appendix to this letter. You can use our online tool to check your residence position. Go to www.gov.uk and search ‘tax on foreign income’. If the online tool shows you were a UK resident, you should also amend your tax return to include all foreign income and gains. You should do this unless you’re non-UK domiciled and make a claim for the remittance basis. If you’re not sure if this applies to you, you may want to get help from a professional tax adviser. If you need to make any amendments To amend your 2020 to 2021 tax return, please sign in to your HMRC online account. Go to www.gov.uk and search ‘update tax return’, then choose ‘If you need to change your return’. You’ll need to pay any further tax you owe, and late payment interest. If we decide to open a compliance check and find errors in your tax return that you have not corrected, we may also charge you a penalty. We call this an ‘inaccuracy penalty’. For more information about inaccuracy penalties, please read factsheet CC/FS7a, ‘Penalties for inaccuracies in returns or documents’. Go to www.gov.uk and search for factsheet ‘CC/FS7a’. You should also consider your residence position for the 2021 to 2022 tax year in line with the guidance in the Appendix. This tax return is due by 31 January 2023. Errors in previous years If you’ve found errors in previous years, you can tell us now by making a voluntary disclosure. You can do this using our online Digital Disclosure Facility. Go to www.gov.uk and search ‘HMRC disclosure service’. You’ll need to include the reference ‘RESOTM2022’ when making a disclosure relating to this letter. You’ll need a Government Gateway user ID and password. If you don’t have a user ID, you’ll need to create one. To do this, go to GOV.UK and search ‘register for online services’, then choose ‘register for HMRC online services’. After you tell us you intend to make a voluntary disclosure, we’ll send you an acknowledgement letter. You’ll have 90 days from the date of the letter to work out and pay any tax you owe. For more information about making a voluntary disclosure, go to GOV.UK and search ‘make a voluntary disclosure’. 09:28:27 2 OFFICIAL Record keeping You’ll need to keep records to support the information you put on your tax return. It’s important that these are accurate and up to date. For information about the records you should keep for Statutory Residence Test (SRT) purposes, go to www.gov.uk and search ‘RDRM12900’. We may ask to see your records if we need to check your tax return. If you need more help If you have an agent, we’ve sent them a copy of this letter. You may want to speak to them if you’re unsure of anything. If you want to contact us, please use the details at the top of the letter. We can help with any questions you have about the letter and any general questions about amending your tax return. However, we cannot give you advice about whether your circumstances meet the conditions for exceptional circumstances. If you need help with this, you may want to get advice from a professional tax adviser. Our contact lines for dealing with this matter will close on 9 December 2022. After that, please phone the general helpline on 0300 200 3310. If you have any health or personal circumstances that may make it difficult for you to deal with us, please tell us. We’ll help you in whatever way we can. For more information about this, go to www.gov.uk and search ‘get help from HMRC if you need extra support’. For help to fill in your tax return correctly, go to www.gov.uk and search ‘self assessment’, then choose ‘how to get help’. Yours sincerely WMBC Wealthy Join the millions of taxpayers already using their Personal Tax Account to access a range of services. It takes just a few minutes to get started, go to www.gov.uk/personal-tax-account Or you can use the HMRC app. To find out what you can expect from us and what we expect from you go to www.gov.uk/hmrc/your-charter and have a look at 'Your Charter'

Replies (11)

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By Matrix
11th Oct 2022 16:59

No I have not had any and sorry I do not know the answers to your questions which I will leave to others.

I wonder what it means when it says that at least one of these errors is showing on your tax return if none of the 6 returns had a figure of more than 60 days.

Did all of them meet the exceptional rules? Did you look at treaty residence or ties with each country for other clients where the limit was breached?

Thanks

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Replying to Matrix:
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By ARAFVH
14th Oct 2022 09:23

Thank you for the reply. It drew my attention to the fact that the HMRC wording I posted (from the HMRC website) includes the wording "Our records show that at least one of the above errors is shown on your tax return for the 2020 to 2021 tax year." Having checked my client letters, that sentence is left off, so HMRC is just saying to check you have not made those errors.
All my clients did meet the exceptional test rules so I do not intend amending returns or contacting HMRC.

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Caroline
By accountantccole
11th Oct 2022 17:12

Got our first one today - she had put 60 in the exceptional days box (right on the limit) - the areas she is asked to check were all correct.
Think they are trying to see if anyone has completed incorrectly, maybe picking anyone that completed the exception box?
We have only seen 1 so far and have lots of non residents although it may take a few days for the rest to arrive in the post still

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Replying to accountantccole:
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By ARAFVH
14th Oct 2022 09:25

Thanks for your response. In my cases the exceptional days were also carefully calculated and met the tests.
Hope you don't get many more letters, as they invariably unsettle the clients a little.

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By mikescore
11th Oct 2022 17:32

Hello
I may be being devil's advocate here but it seems to me that by informing the taxpayer that "at least one of the above errors is shown on your tax return for the 2020 to 2021 year" then HMRC have already made a discovery. Are they then not able to progress it as they see fit (or is this too simplistic)? I would love to be able to ignore this letter and any opinion that I can would be most welcome, but I suspect not.

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Replying to mikescore:
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By Matrix
11th Oct 2022 18:00

I don’t really follow your posts.

You asked about this in April 2020 and were told that the maximum exceptional days was likely to be 60 so you had plenty of time in that tax year to address the issue (travel permitting).

You then exceeded the days, submitted the tax return with (I assume) more than 60 exceptional days and are proposing not to correct this even now HMRC have alerted you to the error?

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Replying to Matrix:
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By Wanderer
11th Oct 2022 18:42

I also don't really follow mikescore's posts.

They seem to flip flop between asking about their own affairs & those of their clients.

Reading them makes me doubt if they have clients at all.

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Replying to mikescore:
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By ARAFVH
14th Oct 2022 09:28

Thank you for the reply. It drew my attention to the fact that the HMRC wording I posted (from the HMRC website) includes the wording "Our records show that at least one of the above errors is shown on your tax return for the 2020 to 2021 tax year." Having checked my client letters, that sentence is LEFT OFF, so HMRC is just saying to check you have not made those errors. They have not made a discovery.
All my clients did meet the exceptional test rules so I do not intend amending returns or contacting HMRC.

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By Catherine Newman
12th Oct 2022 15:48

One of my clients has received one and there is definitely not an error as the correct Treaty Relief claim has been made. I had a similar letter re a client's pension reporting from the High Net Worth unit. When I rang I was told it wasn't an enquiry. It was just an invitation to check that the information was correct and notify HMRC if there was an error. HMRC can then go on to make a discovery if they need to.

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Replying to Catherine Newman:
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By ARAFVH
14th Oct 2022 09:31

Catherine. Thanks for your reply, as you say these are just suggesting we check the entries are justified. It turns out my original post included wording about having spotted an error .. That sentence was not on my client letters, so they have not stated anything IS wrong, just asked to check.

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Scooby
By gainsborough
20th Oct 2022 13:19

Letters mentioned in this week's Agents Update (issue 101) : https://www.gov.uk/government/publications/agent-update-issue-101/issue-...

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