UK taxpayers have traditionally been required to submit a self-assessment tax return within the required time limit or face a late filing penalty. Notifying HMRC that you need to be registered for ‘self-assessment’ is the obligation of the taxpayer themselves.
Finance Bill 2016 will see the introduction of a new power allowing HMRC to raise an assessment of the income tax or capital gains tax in the absence of a self-assessment tax return. The assessment will be made on the basis of the information held by HMRC. It is aimed at UK residents with straightforward tax affairs, where the information regarding their income or gains should be readily available to HMRC. The Simple Assessment notice should provide details as to information held by HMRC which has been used to calculate the tax due.
There will be rights of appeal against the Simple Assessment notice.
HMRC believe that the introduction of the Simple Assessment will minimise the burden on UK taxpayers with simple tax affairs and improve the ‘customer experience’ for those affected, alleviating the administrative burden of completing and filing an annual tax return. HMRC will also benefit, as they will minimise the cases where tax returns are filed with little or no more tax to pay other than that deducted at source, which is a drain on their already limited resources.
There is still scope for errors to arise and it is essential that people understand and utilise the appeal process to avoid an incorrect assessment becoming final.