Claiming Share Loss Relief In Self Assessment Return

tg99

[Deleted User] wrote:

You are correct in that HMRC do not read every tax return but one with such a claim (loss reliefs etc) WOULD be dealt with by a more senior officer (used to be an inspector) who would make the adjustment to your self-assessment account. They most definitely would pay attention to any information in the additional information box.
I have checked with my former colleagues in my old firm and they have confirmed that the method that I have suggested is still appropriate.

Thanks po2. So just to clarify, presumably there is something in HMRC’s algorithm / computer system when receiving self assessment returns that will automatically flag that mine needs an officer to read it incl the additional info boxes and then make the credit to my tax account (e.g. I’m thinking presumably the system detects I’ve filled in the share loss relief to be used against 15-16 income box and this marks my return out for attention)? And therefore off the back of the 16-17 return I submitted a couple of weeks back then in due course I will get a credit without having to contact HMRC further unless they have an issue with my claim which I don’t believe they would have (guessing similar timeline might apply as to repayments where they say don’t contact them until 4 weeks has passed if you’ve not received it)?

And I’ve done a bit more playing around / experimentation with figures in an amendment (not submitted obviously) and yep combined with your and jimmo’s feedback I’m pretty sure that HMRC technician has given me incorrect advice. As if I try and amend my 15-16 return to use the loss against 15-16 income as I had been instructed, this then obviously ups my capital gains for that year and thus the only way to offset that would be to also enter the 16-17 capital loss in the 15-16 return too which I believe would be incorrect.

[Deleted User]

tg99 wrote: »

Thanks po2. So just to clarify, presumably there is something in HMRC’s algorithm / computer system when receiving self assessment returns that will automatically flag that mine needs an officer to read it incl the additional info boxes and then make the credit to my tax account (e.g. I’m thinking presumably the system detects I’ve filled in the share loss relief to be used against 15-16 income box and this marks my return out for attention)? And therefore off the back of the 16-17 return I submitted a couple of weeks back then in due course I will get a credit without having to contact HMRC further unless they have an issue with my claim which I don’t believe they would have (guessing similar timeline might apply as to repayments where they say don’t contact them until 4 weeks has passed if you’ve not received it)?

Broadly that would be my understanding - a pretty good summary of how it used to work in my day and, hopefully, still does. .

And I’ve done a bit more playing around / experimentation with figures in an amendment (not submitted obviously) and yep combined with your and jimmo’s feedback I’m pretty sure that HMRC technician has given me incorrect advice. As if I try and amend my 15-16 return to use the loss against 15-16 income as I had been instructed, this then obviously ups my capital gains for that year and thus the only way to offset that would be to also enter the 16-17 capital loss in the 15-16 return too which I believe would be incorrect.

Yes - that could be the case. I would have to agree that you may not have been given the best advice from HMRC. However, when SA arrived it was always the case that an earlier year return should never be amended for such a claim from a future year. The main reason was that it played hell with payments on account. (If it had been a trading loss claim, your adjustment would be 'by reference' to 2015/16 liability and would not reduce payments on account for 2016/17.) My first post detailed the 'stand-alone' claim system which I stand by.

Let us know how you get on.

Pennywise

[Deleted User] wrote:

However, when SA arrived it was always the case that an earlier year return should never be amended for such a claim from a future year.

It really depends on the circumstances. When I'm doing one for a client, I just weigh the pros and cons. If it's a repayment you want, it's certainly quicker to send an amendment for the earlier year as we've found that gets processed far quicker, whereas we've found delays of 2-3 months if you're relying on them to pick out the later year return due to the tick box (i.e. earlier year claim) and/or letter, requiring manual/human intervention. The other benefit of an amended return for the earlier year is that you can check the figures before submission, so HMRC will repay the right amount, whereas we've found it's a 50:50 whether they get the amount calculation correct if they do it manually as an adjustment arising from the later year return. Swings and roundabouts really, but my preference with HMRC is always to avoid human intervention at their end as it usually leads to delay and error.

[Deleted User]

Pennywise wrote: »

It really depends on the circumstances. When I'm doing one for a client, I just weigh the pros and cons. If it's a repayment you want, it's certainly quicker to send an amendment for the earlier year as we've found that gets processed far quicker, whereas we've found delays of 2-3 months if you're relying on them to pick out the later year return due to the tick box (i.e. earlier year claim) and/or letter, requiring manual/human intervention. The other benefit of an amended return for the earlier year is that you can check the figures before submission, so HMRC will repay the right amount, whereas we've found it's a 50:50 whether they get the amount calculation correct if they do it manually as an adjustment arising from the later year return. Swings and roundabouts really, but my preference with HMRC is always to avoid human intervention at their end as it usually leads to delay and error.

You wouldn't consider then actually detailing the amount of the adjustment required in the additional information box? For example:

loss relief 2016/17 of £1000 carried back to 2015/16. Adjustment due:
Tax £1000 at 20% = £200
Class IV NIC £1000 at 9% = £90
Total adjustment due £290.

I have always done this without issues. Still, I see the benefits of both. I am surprised that it is now fine to amend the earlier year's return - that used to be a definite No No!

Pennywise

[Deleted User] wrote:

You wouldn't consider then actually detailing the amount of the adjustment required in the additional information box?

In the past, I've sent a detailed computation showing the before and after figures, and HMRC have still managed to foul up their figures as I've found they think they're right and are quick and happy to ignore someone else's workings they think are wrong.

At least when you do an amended return, the figures are going to be right and no opportunity for HMRC to argue.

There's just too much "added on" to SA returns these days, such as student loan repayments, child benefit clawback, dividend tax (and zero rate), zero rate band for interest, savings rate band, etc., etc., which I've found HMRC tend to overlook when they're doing the manual adjustments as they just seem to think "£x at 20%/40% gives adjustment of £y" but things are far more complicated now.

[Deleted User]

Pennywise wrote: »

In the past, I've sent a detailed computation showing the before and after figures, and HMRC have still managed to foul up their figures as I've found they think they're right and are quick and happy to ignore someone else's workings they think are wrong.

At least when you do an amended return, the figures are going to be right and no opportunity for HMRC to argue.

There's just too much "added on" to SA returns these days, such as student loan repayments, child benefit clawback, dividend tax (and zero rate), zero rate band for interest, savings rate band, etc., etc., which I've found HMRC tend to overlook when they're doing the manual adjustments as they just seem to think "£x at 20%/40% gives adjustment of £y" but things are far more complicated now.

https://www.gov.uk/government/organisations/office-of-tax-simplification

I remember the huge publicity around this. Working well then :rotfl:

Pennywise

[Deleted User] wrote:

https://www.gov.uk/government/organisations/office-of-tax-simplification

I remember the huge publicity around this. Working well then :rotfl:

Chocolate fireguard. Their latest report on VAT is an absolute joke - just stating what everyone knows, i.e. it's complicated, and recommending that the govt consider either raising the threshold, lowering the threshold or keeping it the same! Well that was really useful wasn't it! The sooner it's scrapped the better as it is worse than useless and has achieved next to nothing.

tg99

Thanks both. I think in the first instance I am going to call HMRC again and discuss the potential different approaches noted above and see if they stand by their original advice.

tg99

So, I spoke to another HMRC tech today. Firstly, he confirmed that whilst it is appropriate to amend returns for some claims (such as when you carry back EIS income tax relief to the previous year), in this instance the previous tech person had given me incorrect advice as per your comments po2, I.e. when making a loss relief claim to carry back from 16-17 to 15-16 it all must be done in the 16-17 return (or via a standalone claim) rather than amending the 15-16 return “which even though it would give the same figure may result in some issues for you further down the line if HMRC investigates” why the 15-16 return has been amended for a 16-17 loss relief claim.

Indeed, he stated that my original 16-17 submission was the correct way to do it (but that I should amend boxes 43 and 44 so they are both the same figure - since it is an EIS company - of £521) other than the fact that I was correct in thinking the Adjustment to tax due section’s ‘Decrease in tax due’ box should also have been filled in with the figure that I should be credited with as a result of the claim (I.e. 45% x £521). However, when I explained that I attempted this but that I got the error message for the Adjustment to tax due section box (as noted in my opening post to this thread), he was not sure why this was given I had completed the boxes for loss relief in the capital gains section. We thus agreed that I would have a further look at my return to see if I was missing anything and if not then I should then call to speak to a Tech after submitting my amended return to get the credit done manually.

So, I am going to play around with it tomorrow but struggling to see what I’m missing that is resulting in this error message....any bright ideas anyone?! I’ve had a look in my 15-16 return and the same thing happens there and I also got a family member to look in his return that he has not yet submitted and if he enters figures for the loss relief section he also gets the error message.....so doesn’t look like it’s a one off 16-17 bug or specific to me in particular so must be something I’m missing I think.

As a side note and on the subject of EIS but not this loss relief claim, I did have a random thought when it comes to claiming EIS capital gains deferral relief. Let’s say you deferred a gain from 16-17 that you would otherwise have owed 20% cgt on and then the gain gets revived 3 years later in a year when you have already used by your annual exempt amount. But, within those 3 years the government has upped the cgt rate to say 40%. Given you can amend returns for up to 4 years I believe, could you essentially ask to have that capital gains deferral annulled such that you now owe HMRC 20% of the gain rather than having to pay 40% on it (if this was allowed then presumably you would also have to pay c3 year’s interest on it). Not a particularly likely scenario but you never know given UK politics at present!