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Tax returns auto-corrected for SEISS grants

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HMRC is automatically correcting tax returns where the total of declared SEISS grants don’t match what HMRC thinks the taxpayer has received, but those auto-corrections can be challenged.

9th Jul 2021
Tax Writer Taxwriter Ltd
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As AccountingWEB reported in May, HMRC had to stall the processing of many 2020/21 self assessment tax returns where the return included, or should have included, a report of a self-employment income support scheme (SEISS) grant.

Processing of these 2020/21 returns resumed on 19 May 2021 when HMRC introduced a fix to prevent some tax returns being incorrectly flagged as containing errors relating to SEISS grants.  

Auto-correct activated

On 19 June 2021 HMRC set its computer to automatically correct 2020/21 tax returns received from that date, where the total amount reported of SEISS grants received in that tax year doesn’t match HMRC’s records. It will take HMRC some time to process all of the tax returns submitted before 19 June, as some manual intervention is required to adjust for SEISS grants.

HMRC has the power to correct a self-assessed tax computation for ‘obvious errors or mistakes’ within the return, without opening a formal tax enquiry. This correction should be done within nine months of the date the tax return is filed.   

The taxpayer should receive a notice of this correction to their self assessment on a form SA302 and a covering letter from HMRC. The agent should also receive a copy of this notification.  

What to do next

Your client is not obliged to accept this auto-correction to their tax return, and can reject it within 30 days of the date of the correction notice issued by HMRC. Any rejection should be made in writing to HMRC, rather than by phone, stating the reasons why you are rejecting it. 

Before you examine the tax return correction you need to be certain about the amount of SEISS grant the taxpayer received. The best way to do this is to check the bank statements for the taxpayer for the year to 6 April 2021. Also ask your client if they have since repaid any of the SEISS grants received.

Five outcomes

There are five circumstances which may have prompted the auto-correction, which require different reactions:

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Replies (16)

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By Hugo Fair
09th Jul 2021 16:42

"HMRC has the power to correct a self-assessed tax computation ... this correction should be done within nine months of the date the tax return is filed.
Your client is not obliged to accept this auto-correction to their tax return, and can reject it within 30 days of the date of the correction notice issued by HMRC ... any rejection should be made in writing."

So taxpayer has to live with uncertainty for up to 9 months, but then has to respond within 30 days ... or considerably less if HMRC's famed 'date of issue' vs 'date of delivery' is still in play!

And then what? You could have changed job or address or even country of residence in the time it currently takes HMRC to reply to written communications.

EDIT: These comments are not aimed at Rebecca who has nicely summarised the current state of play; but setting out these particular procedures is not un-akin to giving the instructions to make your very own chocolate teapot!

Thanks (4)
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By lesley.barnes
09th Jul 2021 17:06

Wouldn't it have been easier to program the SEISS figures into the agents view of self assessment. It must be more efficient than generating all this additional work for accountants and creating a whole new industry at HMRC.

Thanks (16)
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By richard thomas
10th Jul 2021 09:43

This is not the place to raise again the question whether a s 9ZB correction can be done automatically. While what is being done is sensible, my beef about s 9ZB corrections, whether by the computer or officers, stems from my own recent experience.

On 7 April I filed a tax return for 2020-21 as executor of my mother's estate for the period from 6 April 2020 to the date of her death in December. My figures showed a repayment due of about £1000, which will when paid be an asset of the estate. HMRC have sent me three letters telling me the repayment is about £750 which they have paid. Two of the letters told me why the repayment as reduced, and the reverse of on them specified that the correction was made under "Scetion [sic] 9ZB" though without saying what Act that was a section of.

I have made a complaint, not about the typo or the lack of mention of TMA, but about the fact that none of the letters told me of my right to reject the correction within 30 days. This failure denies access to justice. It is compounded by the fact that on its face, there is no facility for adjudication on a late rejection, save for HMRC exercising their discretion as part of care and management.

The reason for the difference between my figures and HMRC's was that my mother's occupational pension was paid monthly in advance, so I returned only a part of the December pension (in accordance with what is said in the Employment Income Manual) but all of the PAYE deducted.

The correction took the RTI figure of pension payment for the whole month. HMRC also corrected the figure of tax paid under PAYE by rounding down the whole number of pounds to show a pence amount. This is contrary to the guidance on page 1 of the tax return and in SAM.

I would be interested to learn if these auto corrections relating to SEISS contain a reference to the right to reject.

Thanks (2)
Tornado
By Tornado
10th Jul 2021 15:09

I have been told (by an Agent Helpline Operator) that two of my clients whose 2021 Tax Returns were dutifully submitted promptly (before 19th May 2021), will have to wait until the end of October for the Returns to be processed, even though I know that there are no errors on them. To make it worse, one of them is due a refund as he cashed in a pension scheme during the year and had tax deducted at 40% when he is only a 20% taxpayer.
The level of errors must be astronomical if HMRC are having this much trouble with the COVID grants.

Note to myself - Never submit Tax Returns before October again. There is nothing to gain by submitting Returns early, so leave it to the last minute like everyone else, even if they were prepared and ready to go months before.

Thanks (6)
Replying to Tornado:
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By arthvirg230
12th Jul 2021 09:35

try logging this with the HMRC Agent Resolution Team - they deal with complaints like this pretty quickly - a response in 3 days and usually resolved in a week to 10 days!

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Replying to arthvirg230:
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By [email protected]
12th Jul 2021 09:59

Morning, have you successfully done this? I have 2 clients waiting refunds submitted 07/05/21, now told to wait until end of October.....

Thanks (1)
Replying to Tornado:
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By Tim Robinson
13th Jul 2021 11:07

Could you not resubmit the return?

Thanks (0)
Replying to Tim Robinson:
By SteveHa
13th Jul 2021 12:46

Once a Return is bogged down in the system, re-submitting won't suddenly free it, and could in fact lead to additional delays.

Thanks (4)
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By Winnie Wiggleroom
11th Jul 2021 06:13

thats all very well if HMRC do actually tell the agent, I have lost count of the cases we have seen where amendments have been made and we are none the wiser until the client gets an unexpected tax demand

Thanks (4)
By SteveHa
12th Jul 2021 08:58

Quote:
Any rejection should be made in writing to HMRC, rather than by phone, stating the reasons why you are rejecting it.

TMA 1970 S9ZB:

"(4) A correction under this section is of no effect if the person whose return it is gives notice rejecting the correction.

(5) Notice of rejection under subsection (4) above must be given—

(a) to the officer of the Board by whom the notice of correction was given,

(b) before the end of the period of 30 days beginning with the date of issue of the notice of correction."

No mention of in writing, and no mention of giving reasons. The legislation simply states that the amendment is of no effect if the taxpayer objects.

I do wonder how anyone is to give notice to "the officer of the Board by whom the notice of correction was given", since they are rarely named, and contact details rarely given, but that's a whole other thing.

Thanks (1)
Jennifer Adams
By Jennifer Adams
12th Jul 2021 10:38

Before I ring HMRC and spend hours on the phone trying to get through can anyone else confirm Tornado and Sam's comment that clients will have to wait until Oct to get their refund?

I have two clients texting every day asking for the whereabouts of their CIS refunds and they are getting pretty desperate especially as 'all their mates' received their refunds within days of submission in April.
Mine were submitted 1st week May.

Also... one CIS client has admitted that he innocently declared the wrong amount. Do I submit an amended return with the correct amount which will mean client going to the end of the list for refunds or do I wait and let HMRC send an amended calculation?

Thanks (0)
Replying to Jennifer Adams:
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By djn
12th Jul 2021 11:48

Jennifer Adams wrote:

Before I ring HMRC and spend hours on the phone trying to get through can anyone else confirm Tornado and Sam's comment that clients will have to wait until Oct to get their refund?

I have two clients texting every day asking for the whereabouts of their CIS refunds and they are getting pretty desperate especially as 'all their mates' received their refunds within days of submission in April.
Mine were submitted 1st week May.

Also... one CIS client has admitted that he innocently declared the wrong amount. Do I submit an amended return with the correct amount which will mean client going to the end of the list for refunds or do I wait and let HMRC send an amended calculation?


I was also told October by HMRC when I rang for an update.
Thanks (0)
Replying to Jennifer Adams:
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By djames
12th Jul 2021 13:59

I rang HMRC on Friday for three clients whose tax returns had been submitted in April.

About 5 weeks ago I was told they would have to wait until 6th July. Of course nothing happened by this date and when I rang them (after waiting the now normal 15-20 minutes to get through on the agents dedicated line) the lady on the other end, who was obviously working from home by the background noise, told me that they should get their refunds by 31st October.

When I pressed her further she said this was the only information she had and they 'may' get their refund before this. When I informed her that one of them was waiting for a 2020/21 SA302 (tax calc and overview) as they were going through a re-mortgage and this wasn't available until the tax return was processed, she informed me 'that all banks and building societies had been informed of the issue and that they should accept the taxpayer or accountant calculation'. Codswallop.

These are people who are hanging on by a thread in some cases (one of the clients affected has terminal cancer) and HMRC are forcing them to wait for over 6 months for a tax refund that they are rightfully entitled to and would help them immensely. All this while covid measures are still in place and Boris and his cronies are still chucking money about like Montgomery Brewster.

Do these people live in the real world? Not fit for purpose is an understatement.

Thanks (4)
Replying to djames:
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By Winnie Wiggleroom
12th Jul 2021 14:12

djames wrote:

Do these people live in the real world? Not fit for purpose is an understatement.

I think what most of us find hard to understand is how HMRC were able to pull out all the stops and react very quickly when they wanted to for paying furlough, SEISS etc, and yet the day in day out stuff takes months, and even the simple basic stuff like replying to a letter from an agent either takes months or never happens at all.

Thanks (5)
Replying to Jennifer Adams:
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By Jdopus
14th Jul 2021 13:00

I can confirm Tornado and Sam's comment, just had the exact same issue yesterday with a client who needed a Tax Year Overview for a mortgage. I was advised by HMRC that it had been flagged for checks, that they couldn't tell me what these checks were and that they couldn't even look at the return until October.

Thanks (2)
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By Ian McTernan CTA
14th Jul 2021 13:39

Ran into the same issues as others are mentioning here: CIS return submitted 10 April and still nothing, promised it would be accelerated, etc and still nothing and now told 'should be October'.

It's interesting that it's called 'self-assessment' and yet when it comes down to it HMRC can hold on to taxpayers money as long as they like whilst if you go a day past a payment date they start threatening legal action.

Even got a case now where a client has made a payment towards his SA payment but HMRC haven't got around to crediting it against his outstanding so Debt Recovery are threatening legal action - none of these sections talk to each other!

Thanks (0)