Reaching the point of no return: simplified assessments won't just end P800 problems

Reaching the point of no return: simplified assessments won’t just end P800 problems

Mon 14 Dec 2015

HMRC have announced the end of self-assessment for straightforward personal tax and trust cases as part of the ‘Making Tax Easier: Simpler Payment’ move towards fully digital tax accounts and the abolition of self-assessment. Powers will be included in the 2016 Finance Bill to enable HMRC to withdraw notices issued to individuals and trusts requiring them to file self-assessment returns.

And no self-assessment

Not being required to file a return will also remove the requirement to self-assess to income tax and CGT. Therefore HMRC will be empowered, as from Royal Assent to Finance Bill 2016 to make informal assessments based on the information that they hold.

This change should see the end of the highly unsatisfactory P800s, HMRC’s current informal method of ‘assessing’ over and underpayments for which no proper appeal process exists and which require a taxpayer who disagrees with them to file a self-assessment.

HMRC’s announcement does no more than outline the proposal: the relevant draft Finance Bill clauses have not been published yet.

The bigger picture

These changes are part of the move towards digital tax accounts which will see major changes to the way tax liabilities are reported and paid: both processes will cease to be mainly annual events as reporting moves closer to updating accounts in real time and payments move towards earlier, for individuals quarterly, payments on account.

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