HMRC starts sending out Simple Assessment Tax Return Alternative

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June 25th 2022
Tax Week 12
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HMRC starts sending out Simple Assessment Tax Return Alternative

Taxman trialling new system to use data shared by its partners to estimate taxpayers income and thus tax bill.

Starting this month the Taxman will be sending two groups of taxpayers either a P800 tax calculation or something brand new called a PA320 'Simple Assessment'.

In order to save taxpayers the time and effort of completing a full tax return, HMRC have been looking for ways to either completely remove or reduce the need for information to be provided in order to calculate the amount of tax due. Whilst this cannot be the case for every taxpayer, HMRC have identified two distinct groups of people to trial the new system of 'Simple Assessments' :

  1. People claiming a pension where the total income exceeds the tax-free personal allowance - but limited to pensioners newly joining this group from last year (2016).
  2. Employees paying tax via their payslip (PAYE) but have previous underpaid tax and this cannot be claimed through an adjusted tax code, which would normally reduce the tax-free allowance.

The new system shows HMRC flexing its new data acquisition muscle and attempting to pre-calculate tax owed based on income figures it receives from its data sharing partners. Simple Assessments is a preview to what will in the future see HMRC filling more information regarding income itself and asking taxpayers to simply 'fill in the blanks'. The Taxman has a system called 'Connect' that uses internal governmental department sources as well as external third-party financial institutions to estimate a taxpayers income information.

This month either a P800 tax calculation or PA320 Simple Assessment will hit the above identified groups of people and show the income information (..and tax due) that HMRC has predetermined. If any of the information is incorrect there will only be 60 days to contact HMRC and get it corrected - with penalties beyond that point as usual. Taxpayers do have a right of appeal and that is within 30 days of the initial contact they make.

So, a letter popping on your mat could be good or bad news - if it's good news then a cheque should arrive within 14 days of any tax refund deduced. Otherwise it means a tax bill is due for payment either immediately (if a tax underpayment is deduced on a P800 tax calculation) or January 31st (if a tax underpayment is deduced via the PA320 Simple Assessment).

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