Member Since: 4th Aug 2009
27th Aug 2019
Thanks Wanderer, as you've named them I will confirm it is BTC where I am having problems. Unused amounts from 2017/18 failing to roll into 2018/19 and I agree that it is a moment's work to enter the figures manually - if you notice. We have found that in some cased they roll forward and in other cases they don't with no obvious explanation for the difference. My main reason for starting this thread was to alert other practitioners that they may need to check on every return with buy to let mortgages that the costs are being correctly carried forward.
For other BTC users the 2018/19 to 2019/20 c/f figure shows up on the Backing Schedule for the UK Property pages and is described as 45a Unused residential finance costs carried forward. I have an example where the disallowed finance costs (box 44) are £4365, the taxable rental profit (box 40) is £2146 and carry forward at April 2019 is the difference between the two £2219, so far so good. But there is no basic rate tax deduction given for 2018/19 because of the adjusted total income restriction so why isn't the whole £4365 showing up as available to carry forward?
27th Aug 2019
Wow, I've not met the notion of 'stuffing figures' into a software package before, perhaps you could explain how to do that? we generally enter them into boxes on a screen using a computer keyboard.
If you read the original post carefully you will see that it is about the new rules on mortgage finance not about loss relief.
Admittedly there could be considerations going forward about setting salaries, taking pensions etc in order to exceed the personal allowance and receive the basic rate tax reduction on disallowed finance costs but first we need to have an accurate record of those disallowed finance costs and the basic rate tax reductions already received on them. This is something I would expect the tax return software to consistently record and at the moment we are getting results which are not consistent.
27th Aug 2019
I'd rather not name the package as we generally have a good relationship with them.
I have run some of the client figures through Taxcalc which I use at home. Taxcalc gave answers which I think are correct and which conflict with some of those on the office package.
Thank you for the taxfiler suggestion, I will look at the demo site. Can you run 2 consecutive years to test the carry forward?
27th Aug 2019
Original query is about disallowed residential finance costs not about use of losses so I don't see the relevance of 'old rules'.
The issue with this client is that he gets no basic rate tax deduction for 2018/19 but the software shows only part of the disallowed finance costs being carried forward to 2019/20.
I am not taking issue with the rules, my concern is that I do not believe the software is applying them correctly.
27th Aug 2019
I agree we should be able to over-ride the b/f figures and will look to do that where appropriate but with 125 returns with buy to let income that is a significant extra workload in a 2 person department and not really what you expect when you take the 'roll forward' option when setting up the next year's return. The software on returns prepared so far has given inconsistent results on almost identical clients which is where I first picked it up.
3rd Jan 2019
A more dangerous and insidious development with 'in year' adjustments on PAYE codes which I have encountered on a couple of clients this year are where 'in year' adjustments on their 2017/18 PAYE codes have been displayed in the online agent information designed to help with the completion of the 2017/18 tax return as 'Underpaid tax for earlier year(s) included in your tax code for this year:'
If entered on the return as described (box 7 TC1) it will actually mean duplicated tax which will not come out in the wash. HMRC are aware that this is an issue and an agent I spoke to this morning said that as far as they are aware it has only affected about 2,300 cases. Be that as it may 2 cases have come across my desk so far for 2017/18 and I am in a small firm so this may be a big underestimate.
In one example I picked up when preparing the return that it was misdescribed by HMRC and not an actual b/f liability so did not adjust the return - HMRC then issued a system generated incorrect 'correction' to our calculation which they conceded when challenged was wrong and reverted to the figures we had filed.
In the second example we prepared and filed the return based on the HMRC website information and only picked up by chance several months later that the liability had been overstated by several hundred pounds. Again when challenged HMRC conceded their information was incorrect and amended the figures. Would they have found the error anyway at some point? I doubt it.
3rd Jan 2019
I think that most of these adjustments are a result of the move to 'dynamic coding' which has been covered in AWeb articles in the last 18 months. The PAYE code amendment is caused by various triggers and one of these is the filing of a tax return.
Like many things introduced by HMRC in the last few years this seems to be subject to a number of teething issues and HMRC are aware that it is throwing up anomalous results which is why they are eager to remove any offending adjustments when challenged.
In my own case for 2018/19 the revised code was seeking to recover tax on my state pension and dividend income through PAYE 'in year' despite my having X'ed box 3 on page TR6 of my 2017/18 return and it also failed to take into account the substantial payments on account due for 2018/19 in January and July 2019. Effectively trying to collect the same tax twice.
Admittedly it would come out in the wash when the next return went in but in the meantime I would have been several grand out of pocket and unable to pay for my February trip to the sun.
26th Nov 2018
Tried out the Taxcalc VAT filer at the weekend.
VAT 100 from an old version of Quickbooks exported to excel and apart from initially making a schoolgirl error on the mapping from the excel spreadsheet to the Taxcalc template it went very smoothly and appears to be filed OK.
3rd Oct 2018
I think you are referring to Box 3 on TR6 but that is not the actual wording on the paper return and is not a catch all. It comes with restrictions which are listed on the tax return guidance notes page TRG13. In particular state pension is apparently excluded from the income where you can opt to pay through self assessment rather than have the tax coded out and there is also an overall limit of £10,000 income. Whether these restrictions are statutory or just HMRC making the rules up I will leave for those more nerdy to comment on.
The problem I have with my own tax is that following submitting my 2017/18 return they have sent me a punishing 2018/19 K code but I also have substantial POAs due for 2018/19 based on my 2017/18 liability so they are effectively trying to take the same tax twice. OK, it will come out in the wash once my 2018/19 return goes in or I can apply to decrease the POAs but those options both carry penalties - loss of use of my money for a year or risk of reducing POAs too far and suffering interest.
I'm think I will give HMRC a call and tell them what I think of their thieving ways and ask for a copy of their calculation of the anticipated 2018/19 underpayment so that I can check it, there must surely be a calculation? I mean they won't just be making these figures up? Right?
31st May 2018
Agree that if you are sending in a paper SA1 then it makes sense to send a 64-8 with it.
Otherwise my preference is online unless client is overseas when there will always be an issue with the authorisation code.