Tax Agent Guide Published by tyndale


									Tax Agent Guide                                                                                                Published
                                                                                                              March 2008

                                                       Changes to Self Assessment

Changes to Self Assessment
This Agent-specific guide aims to provide you with all the information you need regarding the changes we are making
to Self Assessment (SA) this year. It includes details on the new filing dates for SA Tax Returns, design changes to the
Main Tax Returns, changes for computer-generated paper Returns (“substitutes”), late filing penalties, exceptions and
HM Revenue & Customs (HMRC) contact details for Agents.
Further information on using HMRC Online Services is available on the Online Services pages.
Further guides and information on a range of subjects relevant to Tax Agents is available at

         •	New, earlier deadline for
                                                            •	Improving	system	stability
           paper SA Tax Returns from April 2008
                                                                   •	New	design	for	SA	
         •	Benefits	of	online	filing                                 Main Tax Return

                                           Detailed guidance

         •	Exceptions	to	the	31	October	                           •	Paying	electronically
         	 paper	filing	deadline
                                                                   •	Attaching	documents	to	
         •	Changes	for	paper	“substitutes”                           the Main Tax Return

         •	Late	filing	and	penalties                               •	Self	Assessment	Online	–	
                                                                   	 approved	software

                                                 Further help
         •	Common	mistakes	when	                                   •	Informing	your	clients
         	 filing	Returns	
                                                                   •	Contact	details
Tax Agent Guide                                                                                  Published March 2008

New, earlier deadline for paper SA Tax Returns from April 2008
For 2007-08 Tax Returns, Self Assessment Online gives the longest deadline by which to file your clients’ Tax Returns
– 31 January 2009. For paper-based Tax Returns the deadline is now 31 October 2008, three months earlier than the
online deadline, although your clients still have until 31 January 2009 to pay any tax due.
Other important points to note are:
•	 The	period	that	HMRC	have	to	enquire	into	a	Return	–	the	“enquiry	window”	–	is	now	linked	to	the	date	
   of filing rather than to the filing deadline, giving certainty sooner for those who file earlier.
•	 The	HMRC	Calculation	deadline	for	paper	Returns	has	also	changed	to	31	October	in	line	with	the	filing	deadline.	
   If any client – including those excepted from the new filing deadline – wants HMRC to calculate their tax liability,
   their paper Return should be submitted by 31 October to guarantee that a tax calculation will be issued by the
   payment deadline of 31 January. Alternatively you can file online to get an automatic calculation.
•	 There	are	some	exceptions	to	the	new	deadline	for	those	clients	whose	returns	cannot	be	filed	online.	For	further	
   details of the exceptions to online filing, please see the section ‘Exceptions to the 31 October paper filing deadline’.
The primary legislation covering these changes to SA can be found at Sections 88 to 92, and Section 96, of Finance
Act 2007. This legislation is effective for years of assessment beginning on or after 6 April 2007 (the 2007-08
Return onwards).
Before you send your client’s SA Tax Return you must make a copy and ask them to make a declaration confirming
that the content of the Return is correct to the best of their knowledge and belief. The copy of the Return information
and your client’s declaration may be on paper or electronic – for example, your client could send you their declaration
by email - although you will also need to consider any conditions imposed by your professional indemnity insurance.
Once your client has made the declaration you may file the Return online. We advise you, or your client, to keep a copy
of the Return and the declaration.

Benefits of online filing
Last year, over 3.75 million Self Assessment Returns were filed online, benefiting from automatic calculation of
liability, faster repayment of money owed (in most cases) and immediate acknowledgement that a Return had been
received by HMRC.
Filing online can also save time, particularly when dealing with multiple Returns. It reduces errors and discrepancies –
many	of	which	are	picked	up	instantly	–	in	turn	reducing	the	need	for	requests	for	new	or	amended	information.	
We know that, for some, changing to online Tax Returns will take some getting used to. But in the long term, completing
Self	Assessment	Returns	online	will	make	tax	easier	and	quicker	for	all	of	us.

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Tax Agent Guide                                                                                Published March 2008

Improving system stability
A record number of Self Assessment Tax Returns, including a high proportion submitted by Tax Agents, were
successfully filed online this year – over 3.75 million compared with just under 3 million the previous year.
However HMRC’s Self Assessment Online Service was partially disrupted on 31 January 2008. The service also ran
slowly at times on 1 February 2008. We apologise to you and your clients for any difficulties you experienced.
These problems did not affect those filing using commercial software.
We have consistently said that nobody will be unfairly penalised for filing late due to problems with HMRC systems
close to the deadline – so in response to these problems, HMRC announced that any Return (whether online or paper)
received by midnight 1 February 2008 would be treated as filed on time.
We also explained that where users experienced problems with the SA Online Service on 31 January 2008
or 1 February 2008, and were unable to file by midnight 1 February 2008, we would accept claims for “reasonable
excuse” in the usual way. This means we will remove any late filing penalty and treat the Return as filed on time where
the problems with the HMRC Online Service were the cause of the delay and the Return was filed within a reasonable
period afterwards.
Actions to prevent IT problems from disrupting our Online Services in future include:
•	 Substantial	investment	in	IT	as	part	of	the	implementation	of	Lord	Carter’s	recommendations,	including	new	
   infrastructure foundations for the SA service from April 2008.
•	 Enhanced	disaster	tolerance	and	the	ability	to	use	our	servers	more	flexibly	to	support	busy	times	for	all	our	Online	
   Services and to keep systems running normally while maintenance is carried out.
•	 Continued	early	and	regular	testing	of	services	and	enhancements,	including	user	testing.
If	the	service	is	disrupted	during	any	future	peak,	HMRC	will	again	respond	quickly	to	ensure	that	nobody	
is unfairly penalised.

New design for SA Main Tax Return
As part of our ongoing improvements, we are introducing a redesigned paper Main Tax Return (SA100) for the tax year
2007-08,	and	have	also	made	significant	changes	to	the	online	Return	to	reflect	these	changes.
The aim is to make the Return easier for you and your clients to understand by giving greater clarity – avoiding jargon
and technical terms wherever possible – and reducing the amount of information we ask for. The redesign comes as a
result of extensive research involving focus groups, usability testing of draft forms, workshops and consultations with
representative bodies.
HMRC’s version of the online Return will now offer:
•	 Improved	“tailoring”,	enabling	you	to	customise	the	Return	to	you	client’s	individual	circumstances	and	go	directly	to	
   relevant screens.
•	 Pre-population	of	certain	information	that	we	know	can	be	difficult	to	locate,	including	figures	for	PAYE	under-	or	
   over-payments (there will be the facility to over-write these if you believe they are incorrect).
•	 A	more	intuitive	flow	of	screens	which	we	believe	significantly	improves	online	completion	of	the	Return.
Please	note	that	for	the	2007-08	Returns	onwards,	clients	who	complete	the	Capital	Gains	pages	must	also	send	in	their	
capital gains computations.

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Tax Agent Guide                                                                                 Published March 2008

Late filing and penalties
31	October	is	the	deadline	for	paper	Returns	(subject	to	the	exceptions	below).	Paper	Returns	filed	after	31	October	
are	late	and	your	client	may	be	liable	to	be	charged	a	late	filing	penalty.	The	enquiry	window	will	also	be	extended.	
We will still accept paper Returns after 31 October, but by filing online instead (by 31 January) no penalty will arise.
Online Returns filed after 31 January are late and may be liable for a penalty.
Once you have filed a Return on behalf of your client – whether by paper or online – this is considered the legal Return
for	all	relevant	tax	purposes.	There	is	therefore	no	scope	to	replace	a	late	paper	Return	with	a	subsequent	online	Return	
for the same year.
If you believe that there is a reasonable excuse for not filing on time, you should explain to HMRC why you have filed
late and ask for that explanation to be taken into account. HMRC will then consider whether a reasonable excuse
applies. If so, then your client will not be liable to a penalty. If doubts remain after discussion with HMRC, cases can
be	referred	to	the	General	or	Special	Commissioners	for	their	ruling.		
If you or your client pay any tax that they owe by 31 January 2009, the late filing penalty will be reduced to nil.
This is called “capping”. It is a longstanding arrangement designed to encourage prompt payment even by those that
file late. We are keeping this arrangement for now as a “safety net” for customers who inadvertently miss the paper
deadline because they had not yet realised that the dates had changed. But this law is under review and there is no
guarantee that the arrangement will be available after this year, so it makes sense to get into (and get your clients into)
good filing habits now.

Paying electronically
We accept payment by a range of methods, but recommend that you or your clients pay electronically. Electronic
payments are safer, more secure and very efficient. They provide certainty about when payment will reach us, avoid
postal delays and allow you to pay at any convenient time if you use the internet or telephone banking.
Tax due can be paid electronically:
•	 Using	internet or telephone banking	–	this	requires	our	bank	account	details	and	the	Unique	Taxpayer	Reference	
   number	(UTR	–	made	up	of	10	digits	and	the	letter	K,	shown	on	the	payslip	at	the	bottom	of	a	Statement	of	Account).	 	
   It is important that the reference number is given with no gaps between characters. It normally takes three working
   days for these payments to reach our account – please check with the bank or building society to ensure a payment is
   initiated on time.
•	 Over	the	internet	using	a	Maestro,	Solo,	Electron	or	Visa	debit	card	drawn	on	a	UK	bank	account,	by	visiting	the	
   Online Payment Service. This service is supported by Alliance & Leicester. An acknowledgement is displayed when
   the	payment	is	processed.	Payment	will	be	treated	as	having	been	made	on	the	day	that	the	service	is	used,	and	will	be	
   debited two working days after the payment was made.
•	 Using	Bank Giro or at the Post Office.
Further details, including HMRC bank account information, can be found on our ‘Payments’ pages.
If your clients find that they cannot pay on time, they should telephone 0845 366 1204,	quoting	their	Self	Assessment	
reference number.

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Tax Agent Guide                                                                                  Published March 2008

Exceptions to the 31 October deadline
31 October is the new statutory deadline for filing SA Returns on paper, but there are three cases in which HMRC
will allow extra time – until 31 January – for paper filing without incurring a penalty.
There are a small number of SA customers whose Returns cannot currently be filed online because HMRC has
not yet been able to develop online facilities for their particular circumstances, using either HMRC or commercial
software products.
Because this very small minority of SA customers do not have the choice of online filing, they will be allowed to file on
paper up to 31 January, without incurring any penalty that might otherwise be due for paper filing after 31 October.
However, HMRC encourages all taxpayers to file early where they are in a position to do so.
These three exceptional cases are:
•	 Trustees	of	Registered	Pension	Schemes	
•	 Non-resident	Companies	liable	to	Income	Tax,	and	
•	 A	small	proportion	of	other	customers	for	whom	facilities	to	file	online	are	not	yet	available	–	see	the	following	
   section on ‘Changes for paper “substitutes”’ for more information.

Changes for paper “substitutes”
HMRC previously approved some alternative versions of the SA paper Return, known as substitute Returns, which were
produced by commercial software then printed out for submission. They had the same fields as the official HMRC form
but varied in appearance.
The great majority of software products that enabled paper substitutes already incorporate the option to file online.
It makes sense that information prepared electronically should be submitted online – this is more efficient for everyone
and reduces error.
For these reasons, for 2007-08 Returns onwards, HMRC will no longer accept substitutes of the three main
SA Returns, i.e:
•	 Individual	Returns	–	(SA100	series)	
•	 Partnership	Returns	–	(SA800	series)	
•	 Trust	Returns	–	(SA900	series)	

For the time being, HMRC will continue to accept approved substitutes for:
•	 the	remaining	types	of	SA	Return	(Trustees	of	Registered	Pension	Schemes	-	SA	970,	and	Non-resident	companies	
   liable to Income Tax - SA 700),
•	 earlier	years’	Returns	not	available	online,	inclusive	to	2006-07	–	from	April	2009	it	will	be	possible	to	file	the	
   2007-08 Return online, adding another Return each year until Returns for all in date filing years are available
   online, and
•	 for	other	relevant	forms	such	as	the	R40.	

Over time we hope to enable all customers to file online, and we will keep the ongoing need for substitutes under review.

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Tax Agent Guide                                                                                 Published March 2008

Exceptions and “identical” Returns
There is a small proportion of SA customers whose Returns cannot currently be filed online because HMRC has not yet
developed online facilities for their particular circumstances.
For example, it may be impossible to file a relevant supplementary page online because neither HMRC nor commercial
software yet provides this, or the customer’s reference number may not be recognised on the online authentication system
because of additional internal HMRC safeguards on their records.
We do not want to force you back to “pen and paper” for Returns in this category so, following consultation, HMRC
will accept paper Returns that have been prepared electronically, provided that they are identical in appearance to the
official HMRC form.
HMRC has provided guidelines to software developers about what it considers to be identical, and you can check with
product providers whether you can print an identical Return from a particular product.
A list of software suppliers is available on our Online Services pages.
HMRC’s official form is available to download from our Self Assessment pages.
A full HMRC statement about substitute and identical Returns is available here.

Attaching documents to the Main Tax Return
Since	November	2006,	you	have	been	able	submit	online	attachments	with	your	clients’	online	Self	Assessment	Returns.
Full guidance on attachments is available on our Self Assessment pages.
In summary, please note:
•	 The	online	SA	attachments	feature	must	not	be	used	to	submit	supplementary	pages,	additional	Returns	or	
   amendments to Returns.
•	 Attachments	need	to	be	true	PDF	files,	created	either	by	using	software	such	as	Adobe	Acrobat	Writer	
   or a scanner.
•	 The	total	file	size	must	not	exceed	5	MB,	and	our	online	SA	product	allows	a	maximum	of	20	attachments	within	this	
   overall	size	limit.	We	would	expect	any	attachment	you	submit	to	be	well	below	this	limit	and	instances	where	the	
   upper	limit	is	reached	are	very	rare.	As	a	guide,	we	suggest	you	submit	no	more	than	the	equivalent	of	20	pages	of	
   plain	text.	To	minimise	the	size	when	creating	a	PDF	file,	we	recommend	not	using	colour	and	ensuring	there	are	no	
   logos or images within the document. If using a scanner, choose a low scanning resolution, i.e. 150dpi.
•	 Attachments	must	be	virus-free,	not	have	additional	files	embedded,	and	not	be	encrypted	or	
   password protected.
•	 The	pound	(£),	dollar	($),	hash	(#)	and	underscore	(_)	characters	are	not	currently	allowable	in	the	title	of	any	
   attachment file sent with a Return (but can be included in the text).
We will not routinely review attachments and you should therefore attach only material supporting the Return, not
something	that	requires	a	direct	reply.	But	we	will	examine	attachments	prior	to	opening	any	enquiry	into	a	Return,	
to	ensure	they	do	not	contain	relevant	information	which	could	make	an	enquiry	unnecessary.

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Tax Agent Guide                                                                                Published March 2008

Self Assessment Online – software products
A range of online filing-enabled software and forms is available from commercial (third party) software suppliers to
enable online filing of Returns, supplementary pages and attachments. These products offer a variety of different features
–	for	example	some	allow	Partnership	(SA800)	and	Trust	(SA900)	Tax	Returns	to	be	filed	online.	
All the products listed on our Software	Development pages have been successfully tested to ensure that their forms
and supplementary pages can be sent to us over the internet. Further products will be added to the list once they have
tested successfully.
HMRC also provide a free online filing product, “Online Tax Return – Self Assessment”. This will allow you to file the
main	SA	Tax	Return	(SA100)	and	a	selection	of	supplementary	pages.	You	can	find	it	as	one	of	the	available	options	
when	you	have	logged	on	to	our	Online	Services.	Currently	we	do	not	offer	an	online	product	for	Partnership	or	Trust	
Returns though these can be filed online using some commercial products as above.
We have tested all the features of our online filing service, and provide support to users through our
Online Services helpdesk.

Common mistakes when filing SA Returns
We have compiled a list of the common mistakes that cause problems in processing SA Tax Returns. Of course, these
mistakes are less common when filing online, as calculations are done for you and checks are in place to help ensure
information	required	is	requested	by	our	system.
By	avoiding	the	following	pitfalls	you	can	help	your	clients	avoid	unnecessary	delays	and	questions	due	to	missing	or	
incorrect information:
1. Not explaining unusual variations – there is an area on the Return which allows you to explain variations. By filling
   in	this	section	you	can	avoid	follow-up	requests	for	extra	information	to	explain	any	apparent	discrepancies.
2. Misclassifying expenses –	any	anomalies	may	trigger	a	request	for	further	explanation.
3. Not including relevant supplementary pages – any supplementary pages indicated as relevant must be sent
   with the Return.
4. Using rounded-up figures or estimates – these can be a sign that a person’s affairs have not been properly
   maintained	and	could	trigger	further	enquiry.
5. Not including actual information on the Main Tax Return – it is important to provide specific figures where
   appropriate on the Return itself – reference to supplementary sheets or accounts can lead to delays.
6. Capital expenditure vs. capital allowances – another common mistake is entering a client’s capital expenditure in
   the Self Employment section instead of their capital allowances, resulting in a claim to undue tax relief.
7. Highlighting “private use” items – it should be made clear where items have been used for private purposes, and
	 the	relevant	adjustments	made	to	reflect	this.

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Tax Agent Guide                                                                               Published March 2008

Informing your clients
We	have	produced	a	flyer	that	you	can	use	to	inform	your	clients	–	if	you	wish	–	of	the	changes	to	Self	Assessment.		
This covers the essentials of the changes in straightforward terms, and indicates the circumstances in which your
clients may need to contact you for further discussion.
Click here	to	access	the	flyer	(PDF	format).

Contact details
Following favourable feedback from Working Together partners and individual Agents, we offer a speed dialling facility
for Agents telephoning our Taxes Contact Centres. This facility was launched to help Agents who were having difficulty
contacting	us	on	the	public	0845	numbers,	and	enables	you	to	“jump	the	queue”.	We	are	also	starting	to	extend	this	as	
a dedicated service to give you access to more experienced advisers. Further information and the latest list of priority
numbers and their corresponding Contact Centres and Area Offices can be found on our Working Together pages.
You	may	already	be	aware	that	our	busiest	times	for	calls	are	on	Mondays	and	on	the	days	that	follow	a	Bank	Holiday.	
It	would	be	helpful	if	you	could	try	to	avoid	contacting	us	at	these	times.	Please	only	use	these	special	numbers	if	you	
have	an	urgent	issue	and	are	unable	to	get	through	on	the	usual	0845	lines.	The	numbers	are	for Agents’ use only.
Please	do	not	pass	these	numbers	on	to	your	clients.
All	our	Contact	Centres	are	open	Monday	to	Friday	8am-8pm	and	Saturday	8am-4pm,	except	Belfast	which	is	open	
Monday to Friday 8.30am-5pm.
We are also piloting Agent Customer Relationship Managers (CRMs) as a point of contact when it is not possible for
you	to	resolve	problems	through	the	usual	routes.	This	service	is	currently	available	in	Cardiff,	Newcastle,	Manchester,	
Liverpool	and	Glasgow.	You	can	find	further	information	on	our	Working Together pages.
For further information on HMRC contact details, including a basic outline of the many different contact channels
available and examples of the best routes to use in most cases, read the “How to contact us” guide on the
Tax Agent & Adviser pages.

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