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SA100, employment on K code, no information why

SA100, employment on K code, no information why

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My January brain can't work out how best to deal with this.

Client came in this week needing TR doing, we don't have 64-8, and he doesn't have all the information needed to complete the return, mainly he is on a K code with employment and we don't know why. Obviously, this will throw the tax calculation off. I suspect it's tax due from last year coded in, but I don't know.

Do I:

a) Just enter what I've got and make a note in the white space that we have no info about the K code?

b) Try and calculate what the underpayment restriction might be?

c) Other?

Thanks! I'm going with a) for now, with a view to amending it later, unless anyone else has any clever ideas? I don't deal with K codes much at all and for some reason I have a mental block with this one.

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By stepurhan
30th Jan 2014 11:46

Coding only relevant to PAYE

The K code only affects the tax paid under PAYE. It is simply intended to collect tax that might not be collected otherwise, say if an individual does not prepare a return. The usual reasons are benefits received, but underpayments from previous years are also a possibility. It has no effect on the calculations in the return, which should solely be based on the actual income, benefits and gains for the year. So you could put the figures on the returns and not worry about the K code at all.

However, the existence of the K code is a strong indication of other income or benefits where you don't have the information. This may mean you are omitting significant income and benefits from the return. It is advisable to sit down with your client and query the usual suspects (company car/fuel, medical insurance, etc) to see if he is getting any of those. If he is sure he says he is not, you will have to decide if you are happy he is being honest with you. As you have no 64-8 in place, you presumably have no history to fall back on in judging this. It is a judgement call if you want to have your name associated with a return with this uncertainty.

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By rjoconnor81
30th Jan 2014 12:14

Get the client to call HMRC with you so they can do clearance and ask HMRC.  This then points you in the right direction (benefits, other income, previous year's tax etc.)

Or failing that I would submit the return assuming that you need the K code.  The last thing you want to do is create a refund for the client and then have to get them to pay it back when you discover the benefits received etc.  I would then get a 64-8 in place and ask HMRC.  Then amend the return if required.  



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By Monsoon
30th Jan 2014 12:31

Thanks all.

I have no problem with his sources of income and I know there was a large tax bill last year.

At this late stage and given his availability there's no way of getting definites from HMRC before tomorrow, so I think I will stick with option a) and we can look at it in February. I did ask him for his info in April last year and assumed as I hadn't heard from him after various chasers he didn't want any help...!

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By Marion Hayes
30th Jan 2014 12:40

Option C?

Complete return making no mention of code etc.

Only thing is to make sure not to tick for a refund.

In my experience if the reason is an underpayment you should be taking into account the computer automatically overrides those boxes. I have had more trouble where an underpayment was coded in error.

If not then it could be a debt such as penalties or other SA liabilities as they have had the power to code them out for a couple of years now.

Do the online authorisation process - my one on Friday last week was with client on Monday and on my list on Tuesday. Then you can look at the codings issued. It probably won't let you talk to someone that quickly though.

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