Once again Rebecca Benneyworth is on hand during self assessment season to advise accountants in the online Sage Taxation SA surgery. To accompany her free advisory work there, she has also put together this guide for the wider AccountingWEB membership.
HMRC guidance - a good place to start
A good starting point to resolve SA issues is the HMRC website area dedicated to agents. The specific guidance on the self assessment page covers the following topics:
- Keeping informed
- Submitting online tax returns for your clients
- Registering for Self Assessment
- Agent authorisation
- Self Assessment liabilities and payment
- General information to help you fill in tax returns
- Toolkits to help reduce errors
- Agent services - who to contact
- More useful links
Each of these links can take you through a number of other web links to answers; bear in mind that much of the guidance is very basic and will help those pretty new to self assessment but not really experienced agents with specific issues to resolve.
HMRC lists a number of cases where online filing is not possible. In these cases only you can file on paper until 31 January without incurring a penalty, although it is probably wise to submit a reasonable excuse form with the return to avoid late filing penalties being raised which would have to be appealed. The excluded cases are listed as follows:
As time goes on, more and more clients will be repaying income contingent student loans. You have to watch out for the tick box at the foot of page 2 (box 1) and enter the deductions from employment (if any) in box 2. If your client thinks that their loan is almost repaid, they must take it up with the student loan company – you cannot accept their instruction to omit a tick in box 1 – the return will be incorrect.
Correcting past mistakes
It is possible that in checking the 2012 return you spot an error on the previous (2011) return. You are still in time to make an amended return – the deadline is 31 January 2013. However, you will need to consider the penalty implications, as if the inaccuracy gave rise to an underpayment of tax, there may be penalties at stake.
There is no penalty for a mistake made despite reasonable care, but if the mistake was careless, then correcting the inaccuracy is not sufficient – you also need to make a disclosure to reduce the penalty (hopefully to zero). An unprompted disclosure of a careless inaccuracy can qualify for a full discount, reducing the penalty from 30% of the potential lost revenue to 0%.
In order to qualify for the reduction for disclosure, your disclosure must meet the requirements of telling HMRC that there is an inaccuracy, helping HMRC to quantify the inaccuracy (usually by disclosing the amount), and allowing HMRC access to the client’s records to check that all is well. The last of these may not be necessary – HMRC may not request access, so the reduction may be given in any event.
This disclosure can easily be achieved by making a white space entry on the amended return. More information on “careful” when an agent is acting, and the relationship between the agent’s errors and the client’s penalty are in HMRC’s compliance handbook manual CH84540.
Service downtime / unresolved issues
As you would expect, there is no planned service downtime for January on self assessment. There are two unresolved service issues as of 26 November 2012 – the last day that the page was updated. One concerns blank pages when viewing online statements, and the other relates to clients missing from client lists. Do keep an eye on this page as January progresses if you have any problems filing – and we’ll post emergency updates if anything does occur.
If you submit a paper return now without a reasonable excuse, it will attract a £100 penalty immediately, as the return was due to be filed on 3 October. The exclusions list (see above) are fine to submit on paper now, but you should check HMRC’s guidance on reasonable excuse if you need to file on paper otherwise. Don’t forget that if you are using third party software you can file for anyone even if there is no 64-8 in place, provided of course they have a UTR.
A number of software providers offer low cost/pay-as-you go packages for such situations, including: Absolute Top Up (5 returns for £25), Andica (from £12.95 for single returns), Keytime Tax Personal (from £23 for 5 returns), QMS SA200 (£12.45 for individual reutrns), TaxCalc Personal 6 (from £25 for six returns) and TaxShield (from £25). Check carefully to ensure they handle the specific returns you require - and details of other commercial programs are available from HMRC's SA software developers page.
Coding out liabilities and payment generally
You are now too late to get liabilities of under £3,000 coded out so clients will need to pay any tax due by 31 January. Surcharges apply if the balancing payment for 2011/12 is made 30 days late. Don’t forget that HMRC’s banks changed some time ago so don’t let clients dig out an old payslip to pay with – make sure they use one from this year! Some agents are reporting resistance to time to pay requests, but it is worth clients asking – do this before 31 January!
Filed late last year?
You may remember that HMRC staff went on strike last year so the filing deadline was extended. This means that the enquiry window may still be open on 1 February – the window will not run until 5 April as it normally would for late filed returns, just to the anniversary of the filing date for those filed in the first few days of February 2012.
Client not registered?
Current turnaround times are now quoted on HMRC’s website and there is now insufficient time to obtain online authorisation or indeed a UTR for a new client and paper 64-8. If a client has a UTR you can “file only” (see above) but without that you cannot file the return – he probably also has a failure to notify. This is a tricky situation, but you might be able to make payment of tax due to Bradford by cheque, showing the client’s national insurance number on the reverse of the cheque – keep a photocopy and be prepared for some intensive work to match the payment with the liability once all of the references are issued.
Class 4 and brought forward losses
If your client is bringing forward trading losses to set against profits for Class 4 purposes (because those losses were set against other income in earlier years), then the relief for Class 4 NIC cannot be claimed using the self employment short pages. If your software gives you a choice, you will need to fill in the full self employment pages, entering the additional relief in box 101 on page SEF 5.
Multiple sources and class 4
You cannot claim a refund of overpaid class 4 (for those with employed and self employed income) until after 31 January 2013. I prepare my claim forms as I do the returns as my software allows me to check whether a refund is due. I get my client to sign the claim (form CA5610) when he checks his return and I can then submit the claim in early February.
It is too late for clients to opt out of receiving child benefit from the start of the new rules, but it is worth reminding clients with income of more than £60,000 that it is worth considering to eliminate a great deal of difficulty in the future. If your clients have opted out by 7 January, you will need a note on your file so that you can check whether their income falls below £60,000 in future years meaning they would wish to withdraw the election not to receive child benefit.
When talking to clients regarding their 2011/12 return it is worth mentioning the huge increase in AIA from 1 January 2013. The full £250,000 limit will only be available from the start of the accounting period commencing on or after 1 January 2013 (and the transitional rules for periods spanning that date are dreadful!) but clients may welcome the warning. And while on the subject of capital allowances you might mention the changes affecting cars from 1 April 2013 – a reduction in the emissions level that qualifies for 18% WDA means that changing cars before the end of March may be preferable.
Self assessment help on AccountingWEB
- Sage Taxation online SA surgery with Rebecca Benneyworth
- Self assessment page News, advice and Any Answers
- Self assessment help from TolleyGuidance
- Top 10 SA questions answered by TaxCalc
- BTC SA Solution Private user area and FAQ page
- CCH Tax advice line and CCH Online reference library (£1,145 for single user licence)
- Digita support portal
- Drummohr customer support page and Searchable Knowledge Base
- Forbes personal tax user manual
- IRIS Knowledge Base (registered users only)
- Keytime support portal
- PTP January tax resources and Knowledgebase
- QMS SA2000 FAQ page - not many specifics about 2008-09 filing issues
- Sage Taxation Resources
- TaxCalc 2012 FAQ page
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Rebecca trained in London with Kidsons and, on qualifying, spent some time as Chief Accountant of a manufacturing company. She now has her own small practice in Gloucestershire that comprises of owner managed businesses and small companies.
She also lectures extensively for a range of professional bodies, accountancy firms,...