Starting this month, HMRC is introducing a new way of collecting personal tax. The process, enticingly called Simple Assessment, will take data from previously submitted Self Assessments and use it to calculate what tax is owed.
Who’s affected by Simple Assessment?
Initially, two groups will be affected:
- Those who are claiming a state pension for the first time who also have income that exceeds the personal tax allowance.
- Those who currently pay tax through PAYE, but have underpaid tax and can’t have the outstanding amount collected through their tax code.
Whether more people will be affected remains to be seen.
Is it all good news?
Currently, around 11 million people in the UK have to complete a Self Assessment tax return. The process is time-consuming – both for those who need to fill one out and for HMRC – so any move to reduce this burden will undoubtedly be broadly welcomed. However, it’s a big change and brings with it some concerns.
Perhaps the biggest issue is what happens if the calculations are wrong, particularly as there’s only a relatively small window in which to query the amount of tax owed.
If you receive a Simple Assessment, you only have 60 days in which to flag anything you believe to be incorrect. You’ll then have 30 days in which to contest any decision by HMRC.
HMRC is a little cagey on what happens if you miss this deadline, stating “should customers miss the deadline they should contact HMRC to discuss their circumstances or financial penalties will be applied in line with current policy.”
What should I do if I receive a Simple Assessment?
If you get a letter from HMRC regarding Simple Assessment (also known as a PA302 letter), it’s important to carefully check the calculations.
If you’re a Crunch accounting client, let your client manager know as soon as you can and we’ll be able to advise you further.