PAYE requested to SELF-ASSESSMENT

Blameitontherain.

dori2o wrote: »

Along with the tax codes that you chose to ignore, can you remember at any time being sent a tax calculation for any of those years?

One of the reasons for someone who's income falls solely within PAYE to be asked to complete self assessment is for failing to respond to requests to repay underpaid tax.

Up until the 2015/16 tax year the process of repaying underpaid tax that cannot be collected by restriction to your tax code is as follows.

A tax calculation (P800) is issued following the end of the tax year.

Approx 2 weeks later a letter is sent requesting payment of the underpaid tax, or contact to arrange a payment arrangement. The letter is the VPL1, a voluntary payment request.

If no payment or contact is made for 12 weeks then the next letter is sent. This is the VPL2, requesting payment or contact to clear the underpayment.

If no contact is made within a further 12 weeks, then HMRC cancel the calculation and request that you complete a self assessment form.

They do this for a simple reason. Prior to the 16/17 tax year calculations for underpaid tax had no lawful right to recover the tax. The calculations were informal and HMRC had no power to enforce the underpaid tax calculated by the informal assessment. Hence the voluntary payment letters asking for voluntary payment of the tax.

If no payment or contact is received then HMRC cancelled the calculation and requested a tax return simply because it would make the resulting tax calculation legally recoverable. It also also means that interest and penalties can be charged on the balance according to the legislation.

From the 2016/17 tax calculations this process will no longer apply.

Any calculations issued after 6 April 2017 from PAYE are no longer informal, they are Simple Assessments. HMRC has full power of recovery meaning no need to transfer people into self assessment.

The P800 will be replaced with a PA302 Simple Assessment calculation.

OP, you need to check that the calculations are correct. That the pay/tax figures used in the calcs are correct. If you have penalties then try and appeal them, giving reasons why you were unable to fill them in on time. Worst thing that happens with an appeal is its rejected and the penalty stands.

This is a lesson to everyone out there. Tax is YOUR responsibility, not your employers, not your accountants, not HMRC's, its YOURS.

Changes are coming, some as early as 31 May 2017, which people will not expect. Everyone needs to be taking much.more responsibility, checking their tax codes, checking their salary slips/payslips, ensuring the codes issued are being used, making sure if you have more than 1 employment, even with the same company, you're not getting too many tax allowances.

Where possible sign up to the personal tax account, it allows you to update estimated annual pay, update company car details, check tax codes, etc etc and many more features will be added in future.

Imo its also time for tax basics to form part of the national curriculum, so that those entering the world of work will have a basic understanding of how things work to try and make sure they dont end up with the same issues the OP has.

Moral of the story is, dont just ignore stuff. Dont just file it away in a drawer, look at it, read the notes, if you dont understand it then use the various contact methods for HMRC and ask.

I appreciate most people are busy, most people I correspond with daily are busy, but you have to find the time for important things like tax.

Moral of the story is, dont just ignore stuff. Dont just file it away in a drawer, look at it, read the notes, if you dont understand it then use the various contact methods for HMRC and ask.


This experience has been a massive eye opening.

Pennywise

dori2o wrote: »

We do get invited to a few local schools/colleges every year and go in and give a presentation which is generally well received. But its not enough.

Indeed, it needs to be included as core curriculum. The whole education/curriculum needs to be revised as it's not really fit for purpose anymore.

We have the schools spending several lessons on circle theorems in Maths, which will only ever be used by a fraction of a percentage of pupils who go onto very specific careers (such specifics should be part of the specific degree or on the job training for the few jobs that need it), yet don't teach basic lifeskills like taxes, payroll, savings, etc. Complete lunacy!

w06

I've tutored A level students headed to university who, at the point they were deciding whether to go to uni in London, the back of beyond or from home, have no concept of student finances and the costs involved. Massively unprepared whilst their personal statements were being polished and buffed by 'experts' at school.