HMRC asking how much refund you think you are owed?

[Greenmantle]

Just got me thinking.
Just re-submitted my SA for a previous year due to a SIPP payment using the carry forward rule.
One question they asked is "How much you thought was owed?"

Why do they ask this question?
Is it to double check with their calculations?

[Eric Mc]

Some people have never really grasped what is meant by the term "SELF Assessment"

[abzmike]

Isn't the 'self' part to state what my sources of income are in various categories, and state what I think are decuctible, and then for the revenue to apply thier myriad and complex rules to advise what tax is payable? For someone that only needs to know every tax rule once a year, it's a bit of an ask for everyone to be an annual tax expert.

[Eric Mc]

abzmike said:

Isn't the 'self' part to state what my sources of income are in various categories, and state what I think are decuctible, and then for the revenue to apply thier myriad and complex rules to advise what tax is payable? For someone that only needs to know every tax rule once a year, it's a bit of an ask for everyone to be an annual tax expert.

No - the legislation is that the individual is supposed to calculate (assess) their own liability.

By concession, if the return is submitted by 31 October, HMRC will calculate the liability for you. This measure was introduced to encourage tax payers to submit their return earlier.

The underlying Self Assessment legilstion dates back to 1992 when virtually all tax returns were submitted on paper returns and by post .

In more modern times, electronic/on-line filing covers the vast majority of tax returns submitted and consequently, the data is more or less number crunched instantly by HMRC's computer - so in effect negating the necesitty of the tax payer having to do their own calculations.

If you use commercial third party software to prepare and submit tax returns (as accountants like me do), this software does all the calculating first (as required by the law). It also provides a double check on HMRC's calculations (if they carry out any calculations).

[Panamax]

abzmike said:

For someone that only needs to know every tax rule once a year, it's a bit of an ask for everyone to be an annual tax expert.

Completely agree. It's all very well for accountants and others who do this as their job but it's become an absolute nightmare for DIY.

I now have to buy "commercial software" to do some of my stuff which adds yet another level of complexity - learning how to use the software when it's only needed once a year (or quarterly for VAT). Expansion of Making Tax Digital will make this even more a faff next year.

HMRC can't be bothered to collect taxes, they want it done by employers (PAYE) and businesses (VAT). Income Tax and CGT rely on routine daft questions and occasional random checks. CGT is an absolute nightmare for them now that people are supposed to submit returns for tiny gains of just over £3,000

[Sheepshanks]

Eric Mc said:

In more modern times, electronic/on-line filing covers the vast majority of tax returns submitted and consequently, the data is more or less number crunched instantly by HMRC's computer - so in effect negating the necesitty of the tax payer having to do their own calculations.

I'm bemused by the lack of calculations people are referring to - are they doing paper submissions?

Must admit doing CGT for the first (and probably only) time last year threw me a bit - but the online system pretty well won't let you do the wrong thing, it errors if you try to move on.

[Eric Mc]

Sheepshanks said:

I'm bemused by the lack of calculations people are referring to - are they doing paper submissions?

Must admit doing CGT for the first (and probably only) time last year threw me a bit - but the online system pretty well won't let you do the wrong thing, it errors if you try to move on.

It's a bit of a moot point as most people do not submit paper returns any more. HMRC tried to make on-line submissions compulsory for everybody who submits Self Assessment returns but they were blocked from doing so on the grounds that compulsory use of computer technology would disadvantage certain groups - especially those who are visually impaired or cannot for, whatever reason, use computers or other electronic devices.

You can also be exempted for religious reasons.

Makes me wonder how this is going to pan out over Making Tax Digital.

[tr7v8]

According to my accountants I am owed over £1000 by HMRC from 23/24, I still haven't seen it!

[Greenmantle]

Eric Mc said:

abzmike said:

Isn't the 'self' part to state what my sources of income are in various categories, and state what I think are decuctible, and then for the revenue to apply thier myriad and complex rules to advise what tax is payable? For someone that only needs to know every tax rule once a year, it's a bit of an ask for everyone to be an annual tax expert.

No - the legislation is that the individual is supposed to calculate (assess) their own liability.

By concession, if the return is submitted by 31 October, HMRC will calculate the liability for you. This measure was introduced to encourage tax payers to submit their return earlier.

The underlying Self Assessment legilstion dates back to 1992 when virtually all tax returns were submitted on paper returns and by post .

In more modern times, electronic/on-line filing covers the vast majority of tax returns submitted and consequently, the data is more or less number crunched instantly by HMRC's computer - so in effect negating the necesitty of the tax payer having to do their own calculations.

If you use commercial third party software to prepare and submit tax returns (as accountants like me do), this software does all the calculating first (as required by the law). It also provides a double check on HMRC's calculations (if they carry out any calculations).

Eric - we have clashed over this point before!
I'm in agreement with a couple of guys on this thread in arguing that HMRC should do the one and only calculation themselves.
It doesn't need a quantum computer to process this information and spit out an answer.

Obviously any answer that HMRC produces I will double check but what I am concerned with is that HMRC might just look at my value and say "that'll do - looks about right" which certainly won't do.

In addition in light of my recent post where it seems that we now have two separate competing HMRC systems "Simple Assessment P800" and "Self Assessment" for the same tax year producing different values it really makes HMRC look extremely amateurish.

I have just had a ten minute conversation with a tax man on the "Simple Assessment" side who basically said that once the "Self Assessment" side has processed my refund then come back to us so that you can inform us to update our records!

No wonder we have lost faith in HMRC.