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January's top 10 self assessment troublespots

16th Jan 2015
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Ahead of her self assessment surgery with Sage next week, Rebecca Benneyworth casts an eye over the topics she sees people tripping up over so far this tax season.

Continuing our SA coverage, Benneyworth considers the following key points to watch out for in 2014 returns.

1. High income child benefit charge

If your client’s net adjusted income exceeds £50,000, you may need to declare a charge to claw back any child benefit that has been received by your client or the person with whom they were living at the time the child benefit was paid. This will involve also checking whether your clients’ partner has net adjusted income of a higher amount, in which case the partner will be liable for the charge.

However, this is not the end of the story. Your client (or their partner) may have elected not to receive child benefit in 2013-14 on the basis that they expected their net adjusted income to exceed £60,000. If there has been an unexpected reduction in income, then they may need to withdraw the election not to receive child benefit, and to notify HMRC that child benefit is payable for the 2013-14 year.

Life becomes even more complicated if the person with the higher income has between £50,000 and £60,000 as the child benefit will be paid in full and a tax charge will also be due to reduce the payment to the correct amount. You will need to review the position carefully to ensure that you take the correct steps.

Net adjusted income is total income less the gross amounts of both gift aid and pension contributions paid net.

2. Student loan repayments

As before, student loan recovery may be an issue. You must ensure that the student loan box is ticked if your client is liable to make student loan repayments. The student loan amounts collected through the tax return are due as if they are tax, so late payment will be charged to a late payment penalty in the same way as if the tax due for 2013-14 is paid late.

3. Gift aid donations

This is now the only way to affect the tax due for 2013-14 (assuming there are no losses to carry back). Clients who are on the very edge of an abatement band – such as that starting at £100,000, but also for older taxpayers and those liable to High Income Child Benefit Charge can make a donation work very hard for them if paid now (before the tax return is filed) and carried back to 2013-14. Some clients may already have made gift aid payments between 6 April 2014 and now, so it is worth checking if your client is just into some of the higher effective tax rates.

4. Coding out tax liabilities

It is now too late for a liability for 2013-14 to be coded out – the return needed to be submitted by 30 December 2014 for a request to be made. However, noting those clients who missed the boat this year, and ensuring that they submit their records earlier next year may give them a welcome cash flow boost.

5. Transferrable married allowance

Looking forward to 2015-16 tax year, some clients may be in the position of wishing to transfer unused personal allowances to their spouse or civil partner. It is probably worth reviewing clients as you progress tax returns this year, to give you an idea of how many will be needing this advice. The likely position is that you will make an election to forego personal allowance of £1,060 on your client’s 2016 tax return, so this is some time away, but it is worth thinking about how you will assemble information about spouse/civil partner and their income which you will need in order to make a decision about the appropriate advice later.

6. Non resident status

This is the first return affected by the new statutory residence test in Finance Act 2013. As a result you will see that the non resident pages are seeking quite a bit of information that may not be relevant to your clients’ tax positions. For example, if your client spent less than 16 days in the UK in 2013-14 he is automatically not UK resident. However the form still requests information about trips to the UK and work days both in the UK and overseas, even though these will not impact on your client’s residence status for 2013-14. Now that you have seen the data the forms seek to collect, you can warn your client to have that information ready for next year’s return.

7. Property in the UK – non residents

Although this is a future issue, the tax return for 2014 will flag up any clients who may need advice for 2015-16. Changes in capital gains tax coming into force on 6 April 2015 will result in a tax charge for non residents on UK residential property. It will also prevent someone who is not UK resident from nominating a UK property as their PPR unless they spend at least 90 days (midnights) there in 2015-16. Where a client has left the UK and retains a property here, they may need specific advice about future capital gains tax liabilities. Reviewing 2014 tax returns provides the ideal opportunity to identify non resident clients with UK letting income who may be in need of advice.

8. Problems paying

It is no secret that HMRC is becoming much more forceful when seeking to collect tax debts, and debts are passed to external debt collectors much quicker now than in the past. If your client thinks that they may not be able to settle their liabilities in full at the end of January, they (or you) should contact HMRC as soon as possible in order to seek time to pay arrangements. It is much better to do this before the liability is actually due as late payment penalties will not then apply, although interest is always chargeable.

9. Correcting earlier mistakes

It can be the case that preparing the 2014 return throws up an error made previously on the 2013-4 return. The error can be corrected by filing an amended return before 31 January (irrespective of the date the 2013 return was filed), but note that this leaves the enquiry window open for a further 12 months in respect of the corrected item. Merely correcting a return to show the right figure may not meet HMRC’s test of “disclosure” of an error so if you think that your client has been careless then you may wish to make a stand alone disclosure. If the amendment date has passed, you will still need to notify HMRC if there is additional income liable to tax that was omitted from the 2013 return.

10. Paying HMRC

HMRC changed their bank accounts some time ago now, but it is not unusual for clients to dig out an old payslip to make payment. It is worth ensuring that clients know how to make a payment before the end of January so that the last few days run smoothly. For clients who have an HMRC self assessment log on, most will be able to pay their tax through a new online payment gateway. This opened for business very recently, so not all clients will be able to see the new facility as it is being rolled out slowly, but it is worth being aware of. Payments are made by debit card.

Further reading:

Replies (12)

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By Cloudcounter
16th Jan 2015 14:49

The real troublespots

1  Clients not bringing in their paperwork on itme

2  Paperwork brought in is completely for the wrong year

3  Paperwork is for correct year but incomplete

4  Client brings in "missing information" but that's incomplete or for the wrong year

5  You send an email with five queries.  Client answers the first and ignores the next four

6  When asked for bank interest, client says that "it's the same as last year" or tells you that the account was closed by April 2014, so they don't have to declare interest from April 2013 to date of closure

7  When chased, client answers the other four queries by sending a copy of the wrong information that was originally brought in,

8  Client brings in return late, and takes two weeks to answer queries, then tells you that he is going on holiday in two days so needs to have the tax return before then

9  When you send the return for approval, client refuses on the grounds that her name changed when she married last year, but didn't tell you

10  After receiving the tax return with letter/email setting out exactly how much to pay and when, client telephones to ask "how much do I have to pay"

Thanks (24)
By ireallyshouldknowthisbut
16th Jan 2015 16:25


Bit late by next week! Our job next week on SA issues is mainly to make sure all the few stragglers out for signature come back and get filed and and part complete ones are dealt with.

Anything coming in this weekend is not going to get a rush job priority, much rather do our December year end company accounts and VAT that came in first week in Jan than pander to those that take until last 2 weeks of Jan to come to us if we have any slack.



Thanks (4)
Jennifer Adams
By Jennifer Adams
17th Jan 2015 10:54

You are so right - Cloudcounter!

I read your list nodding my head with agreement to... everything!

I thought I'd nagged enough this year to get everything in by 1 Dec. I was ignored.

Said in my first newsletter of the year and the last plus emailed and phoned

Its Sat and I'm working - as I will tomorrow.

Husband says I should not be so kind.


Thanks (1)
Stephen Quay
By squay
17th Jan 2015 18:20

Burning the midnight oil. Not me!

I really tried hard this year to chase clients during the year and by an large it has been better. So much so that I took two weeks off over Christmas and New Year and enjoyed the break. I can't remember the last time I did that. Starting back on 5 Jan I was happy that all the 31 Jan deadlines (SARs and companies) would be met if the records had already been received. So far so good. The arrival of late records started as soon as the holiday was over and I've told them all that as it's so late we cannot guarantee getting them done by 31 Jan. Most accept this. The ones most likely to be left until Feb are the messy jobs. Getting a penalty is the best way to focus the clients' minds if you want to educate them - not deliberately though. We'll do the best we can but I'm not burning the midnight oil for anyone!

Thanks (1)
Chris M
By mr. mischief
18th Jan 2015 13:30

Increase your fees!

I have 4 left out of 139, draft figures with them for checking.  I have 2 "no shows" who may turn up by 31 Jan.  The 4 all gave me source data after 31 December so are paying 50% variations, as will the 2 "no shows" if they turn up now.

January is usually a busy month for me, the banks virtually shut up shop on 15 December in terms of decision making so things that would normally go through in December get done in January.  This year is no different - one client is selling up for £1.5m, two are in loan deals for £500k or so, and one is calling in the liquidators.

These are all high priority high value transactions which deserve my full attention.  And they are all getting my full attention because I am not snowed under chasing poor quality business people for missing bank statements and all the rest of it.

The 50% extra letters work.  No nagging, just a contract variation in the post which had been well flagged up previously.  Payable in full up front before you start work.

This year this has cost me 1 client of the "late late club, half a story" variety.  My suggestion is for folks to put an action into their diaries for October 2015 to send out the "show up or pay an extra 25%" letters which is step 1 on the road to the 50% price hike.

Thanks (2)
By ayjay3
19th Jan 2015 11:13

High income child benefit charge

I have 3 clients now who have received letters from HMRC about the above asking them to submit revised tax returns for 2012/13 to include the amount of child benefit received even though their income was less than £50,000.  All the advise/instructions including HMRC state this doesn't have to on on the form under these circumstances, so why are they asking now.  And to also include on this year's tax return!

Thanks (0)
By halblackburn
19th Jan 2015 11:54

High income child benefit charge

Question 2 in the 2013/14 Tax Return differs from that of 2012/13 but our expensive tax software still asks for an answer to the 2012/13 question.

2012/13 - Enter the number of children you and your partner received Child Benefit for during the period from 7 January2013 to 5 April 2013.

2013/14 - Enter the number of children you and you partner were entitled to receive Child Benefit for on 5 April 2014.



Thanks (0)
Replying to hedglen:
By ayjay3
19th Jan 2015 12:06


Well, perhaps you pay too much for it!


If HMRC's instructions say only needed if earn over £50,000 why are they and your software asking for the information, even though they have already had it in the tax return.  Somewhere else has said just ignore the request!!  One client has completed a form on the back of the letter to say hasn't received that much.

Thanks (0)
By Lords
19th Jan 2015 12:14

Re no 7

A non resident owns a uk residential property which is currently being let.

The property is showing a substantial capital loss

His parents are UK residents

After 6th April 2015 will there be any planning opportunities available so that the potential CGT loss can be utilised? 

Thanks (0)
By norstar
19th Jan 2015 14:03

Hard approach = more HMRC attention?

I swore I'd be harder this year and say anyone coming in now would face a penalty.

But how to you reconcile that with the fact that the more of your clients filing late will probably taint your agent record with HMRC and potentially affect your participation in future initiatives?

In the past, I've ensured my clients are on time for this reason, but if I now said "sod you" and 30 clients file late, is that not going to be a black mark on my agent record leading to more enquiries?

Thanks (0)
By Discountants
19th Jan 2015 14:27

To Norstar

From the dealings I have had with HMRC I feel they view returns which are subsequently amended significantly as worse than a return submitted late.

Which gives you the choice of two evils :(

Thanks (0)
Should Be Working ... not playing with the car
By should_be_working
20th Jan 2015 11:18

Number 11 - Tax Code Surpise!

Not sure it would make others' top 10, but...

"Tax from earlier years collected via this year's PAYE code." If your software (or processes) don't pick this up automatically, it can make for an embarrassing follow-up phone call, especially if it's turned a refund into a bill.

More of a problem these days since we don't get copies of tax codes, or notification that one's been issued, and the client's don't bother passing them on.

Not that's it's ever happened to us. No, not at all, honest. *cough*

Thanks (0)