Taxpayers who receive simple assessments have the choice of two payment methods, both of which create issues for certain taxpayers and problems for their tax agents.
The simple assessment is a tax assessment made by HMRC, rather than a self-assessment made by the taxpayer as I explained in simple assessments are coming. It is printed on a form PA302.
HMRC expect to issue 400,000 simple assessments for 2016/17 by the end of this month, so some of your clients may well receive one. If they do, you should also receive a copy as their tax agent.
Taxpayers who are already in self-assessment should not receive a simple assessment, unless HMRC has erroneously set up a duplicate record for that person. The individuals who may receive simple assessments for 2016/17 should be restricted to:
- Those taxed only under PAYE, who owe tax which can’t be collect through PAYE
- Pensioners who started to draw their state retirement pension in 2016/17, which is their only source of income, and it exceeds their personal allowance (this can happen!).
Ways to pay
Taxpayers who have received a simple assessment for 2016/17 generally need to pay the amount due by 31 January 2018 (see payment date). However, there are only two ways to pay:
- Online through the taxpayer’s personal tax account
- By a cheque sent through the post to HMRC.
The personal tax account can’t be accessed by the taxpayer’s tax agent, so the taxpayer needs to access their account, and jump through the identification hoops via the government gateway do so.
Once they have accessed their personal tax account the taxpayer can pay the amount due using a debit card. The advice on gov.uk says the taxpayer can pay using a credit card linked to a business bank account, but that is not a good idea as it may create a benefit in kind, as I outlined in how to pay tax.
Cheque in the post
The alternative to using a debit card is to send a cheque in the post to: HMRC, Direct, BX5 5BD.
The simple assessment is not issued with a payslip, so the taxpayer must write the reference number from the PA302 on the back of their cheque. This is a number unique to that assessment, and is not the taxpayer’s UTR number or their NINO.
HMRC will not issue payslips for simple assessments, even when asked to.
LITRG advise the taxpayer to staple a covering letter to the cheque explaining what the payment is for, but I’m not sure that will work as letters are routinely separated from cheques on receipt at HMRC, and filed in different places.
The simple assessment is only issued where the tax due can’t be collected through PAYE, so it is not possible to have the amount due coded out, even if the taxpayer’s circumstances have changed so there is sufficient PAYE income available to support the deduction.
Where the simple assessment for 2016/17 was issued after 24 October 2017, the due date for the tax payable is three months and seven days from the date of the assessment. This deadline may not be obvious from the face of the PA302.
If the taxpayer doesn’t have the money to pay the simple assessment debt in one go, they can ask HMRC for a time to pay arrangement, by calling 0300 200 3835. You can help negotiate this deal for your client. HMRC is not currently charging interest or late payment penalties on simple assessment debts.
Appeal or query
There are two ways to challenge the figures shown on the simple assessment – by raising a query with HMRC within 60 days of the date of issue, and if that doesn’t resolve the matter, by a formal appeal.
The query mechanism is quite informal and can be done by way of a letter, phone call, or even by web chat. The formal appeal period starts on the day HMRC make a decision on the query and runs for 30 days.
The taxpayer, or their tax agent, can request that the taxpayer’s case is transferred into self-assessment and out of simple assessment for future periods.
About Rebecca Cave
Consulting tax editor for Accountingweb.co.uk. I also co-author several annual tax books for Bloomsbury Professional and write newsletters for other publishers.