As part of the ongoing process to make use of the information HMRC expects to have available, HMRC will be able to make 'simple assessments' for income and capital gains and to withdraw a notice to complete a return in the absence of a taxpayer request.
From 2016/17 HMRC will be able to raise simple assessments of a taxpayer’s income or capital gains tax liability where the taxpayer has not completed a tax return. It is anticipated that simple assessments will be issued in straightforward cases where HMRC have all the necessary information from the taxpayer or third parties. This is part of the machinery accompanying the transformation of the tax system under the Government’s 'Making Tax Digital' reforms.
The mechanics set out in the Finance (No.2) Bill 2015-16 include:
- The simple assessment must be based on the information available to HMRC and show the details of the income and gains assessed. It should also show applicable allowances and reliefs. The assessment should be in sufficient detail for the taxpayer to check.
- The simple assessment should state the amount of tax payable, how it should be paid and the due date of payment.
- HMRC will be able to issue more than one simple assessment for a year of assessment and also be able to withdraw a simple assessment.
- HMRC will also be able to unilaterally withdraw a notice to complete a tax return (for 2014/15 onwards).
- Before the taxpayer can formally appeal against the assessment, there will be a query procedure they must follow first. HMRC are obliged to consider the query and provide a final response in writing.
- Where HMRC decide they need further information or time to consider the query they can postpone all or part of the tax due under the simple assessment. HMRC should notify the taxpayer in writing of the postponed amount and the taxpayer is then under no obligation to pay the postponed amount.
- Once the taxpayer has been given notice of a final response, they will be able to formally appeal against the simple assessment in the usual way and the 30 day time limit will run from the date on which the taxpayer is given notice of the final response.
- The tax payable will take into account any payments on account, e.g. whether paid under self-assessment or the advance Capital Gains Tax (CGT) payable by non-residents on disposals of residential property.
- The due date will be 31 January next following the year of assessment unless the simple assessment is issued after 31 October next following the year of assessment in which case the due date will be three months from the day after the issue of the assessment.
- Provisions are also made to extend late payment interest and penalties to amounts payable under simple assessments but these will be made effective in due course by statutory instrument. So there may be a period of grace while the system beds in.
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