Simple Assessment

In an effort to reduce the number of taxpayers in the Self Assessment system, HM Revenue & Customs (HMRC) have introduced Simple Assessment under which they calculate an individual's tax liability using information supplied to them by other sources rather than requiring the completion of a Tax Return.

The first Simple Assessments were issued in September 2017 for 2016/17 and were issued to:

1) New state pensioners who had income that was more than the personal allowance in 2016/17.

or

2) Taxpayers paid through PAYE with underpaid tax that cannot be collected through a restriction in their code number.

Any existing state pensioners with income in excess of their personal allowance in 2016/17 who have received a Notice to File should complete a 2017 Self Assessment Tax Return (SATR). It is intended that this group will come out of Self Assessment and will be dealt with by Simple Assessment from 2017/18. Simple Assessments can be issued to individuals or trustees.

The Simple Assessment tax calculation could either be in the form of a tax calculation P800 or a Simple Assessment letter PA302. This will show:-

• Income from pay
• Pensions
• State benefits
• Savings interest
• Employee benefits

Taxpayers should check the information and if it is correct they need to take no further action other than to pay the tax by the due date.

A taxpayer who thinks there is an error has 60 days to contact HMRC. If taxpayers are not satisfied with the follow up response from HMRC they have 30 days to appeal against the decision.

An individual who receives a Simple Assessment does not need to notify HMRC of chargeability of tax unless they have chargeable income or gains which are required to be declared under Self Assessment.

HMRC can withdraw a notice to file a SATR if they intend to issue a Simple Assessment and an individual who has received a withdrawal notice will not be subject to a late filing penalty.

HMRC has until four years from the end of the tax year to issue a Simple Assessment.

Under Self Assessment individuals have nine months after the end of the tax year to compile their information and check everything before submitting a return. But under the Simple Assessment the individual will receive a calculation from HMRC and have only 60 days to check it, obtain further information from their employers or banks, and then agree it or go back to HMRC with amendments.

If you require assistance in connection with this or any other tax matter contact Kirsty MacDonald at Rennie Welch LLP either by email at kirsty.macdonald@renniewelch.co.uk or by telephone on 01573 224391.