HMRC to issue 400,000 auto-completed tax returns!

Why does such a statement fill me with dread? While I can see the appeal for HMRC to gather data from different sources to validate it and make the life of the taxpayer easier, there are three things I am sure of:

  1. There will be an unacceptable number that are incorrect, inaccurate or just completely wrong returns.
  2. Taxpayers will be confused and unsure- or worse, still convinced HMRC must be right.
  3. Accountants and business advisors will be left trying to pick up the pieces for their clients who will not want to pay for this work.

So where do you start? Education. Your clients need to be aware what could be dropping through the letter box and that you still need to see them and validate the information. Plus give you plenty of time to be able to assess the data correctly.

You need to enquire whether new clients have received them.

This is also an ideal time to reinforce the value of the work that you can do, and by having the information early it gives you the greatest opportunity to help.

HMRC say, “Millions will benefit”. In theory, they will read, comprehend and agree the figures…. oh and then pay the bill!

How many clients look at tax calculations, let alone comprehend the workings? This will lead to mistakes and misunderstandings that then have to be sorted out.

The initial group is limited to two relatively small groups, which is a good thing!

  1. New state pensioners whose income is about £11,500.
  2. PAYE Taxpayers who have underpaid by a relatively small amount.

But the net is widening and this type of data gathering is going to increase- meaning that it really starts to impact on some of your clients. In theory it will only be where HMRC has all the taxpayers income information. But, how can they truly know what a self-employed person will have earned? Plus, situations do change.

Let’s see how this develops and remember that clients only have 60 days to challenge the simple assessment.

Article Source: James Miller