Just submitted your own Tax Return online? Think you have paid the right amount of Tax? Think again!
For THP, this 2016/17 SA tax return season has been particularly stressful, as there have been so many exclusions from online filing. These exclusions were all caused by HMRC being unable to programme their tax computations to work your tax out correctly according to tax law!
Although HMRC issued a fix to their tax computation in late October 2017, a large range of tax returns still can’t be filed online, as detailed on the SA individual exclusions list – which is now in version 8. However, it appears there are number of additional problems which have recently emerged, which are not on the exclusions list.
For example, the CGT annual exemption should be available to set against any gain arising in the year as chosen by you, the taxpayer. However, the HMRC computation is overruling commercial software and setting the exemption against gains taxed at 10% or 20% when you may want it to be set-off against gains from residential property taxed at 28%.
Other problems arise with the allocation of the savings and dividend allowances. For example, where you have made a pension contribution or gift aid donation which expands the basic rate band, leaving some dividend income to be taxed in the higher rate band. Also there are calculation errors where you have taxable interest which straddles the higher rate threshold.
There is no time left for HMRC to issue another fix to their tax calculation for last year, so these problems will have to be sorted out in February 2018, or later.
HMRC is advising that we all file our tax returns on time online, even if the tax calculation is incorrect but to draw attention to the problem in the additional information box on the return!
The problem though is that the way the computations are displayed is so complicated that unless you know what to look for you are likely to miss any errors altogether.
Even if the computations turn out to be wrong, you should pay the amount shown as due on the tax computation, then claim a refund later.
If the tax liability shown turns out to be too low then naturally you will be expected to pay the difference.No interest or penalty will be charged, however.
To be sure that you aren’t paying too much tax to HMRC why not give our teams at THP a call with offices in Cheam, Chelmsford, London City, Saffron Walden and Wanstead we can help check your computations? Or of course, save yourself a great deal of time and hassle and let us submit your tax return on your behalf next year?
Given the current state of HMRC’s software, you could well end up saving more than it costs you!