Taxpayers asked to pay same simple assessment twiceby
Some taxpayers have been asked to pay the same tax bill twice after HMRC sent paper copies of simple assessments that had already been paid.
The Institute of Chartered Accountants in England and Wales (ICAEW) Tax Faculty has raised concerns about HMRC issuing duplicate simple assessments to taxpayers, despite some having already paid the bill.
The confusion started after HMRC sent taxpayers who opted for paperless communication a digital version of simple assessments through their personal tax account from May 2021 to July 2022. HMRC later put the brakes on this digital method after it became unclear whether it satisfied the legislative requirements.
The tax authority then pressed ahead and sent paper versions of those simple assessments while the legislation was being updated.
Simple assessments were given the all-clear to be served digitally from 6 April 2023, but in those intervening months, confusion spread.
Confusion over duplicate assessments
The Tax Faculty explained that the re-serving of the document was to ensure the assessment had been validly served, but those taxpayers who had already settled the digital simple assessment were left confused by the duplicate assessments, which still listed the full amount.
However, the paper assessment did include a footnote clarifying that “any payments made have not been included in the above calculation”.
Taxpayers concerned about their payments found little support from HMRC contact-centre staff, who according to the Tax Faculty do not have access to the simple assessment payment system and had to pass these calls to a back-office team.
Not so simple
Simple assessments were introduced in 2016/17 as a means to prevent taxpayers from being dragged into the self assessment system, or to allow them to be taken out of self assessment where HMRC has enough information to calculate the tax due.
A simple assessment is a tax assessment made by HMRC rather than a self assessment made by the taxpayer. The paper version is delivered on form PA302, and it should only be sent when the tax liability can’t be collected via PAYE.
The taxpayer then has 60 days to challenge the figures from the date of issue of the assessment. But this relatively new experiment of simple assessments has been far from simple for some taxpayers. The trials and tribulations around simple assessments have been well documented on AccountingWEB.
In a post on Any Answers in 2020, AccountingWEB member Helpful Harry was told by HMRC that a major review of the simple assessment project in 2019/20 “threw up some anomalies”.
So in response to the incorrect simple assessment, HMRC advised the agent to submit the self assessment tax return for 2019/20 so the client could get a refund, but answer “no” to the question asking if any underpayment has been included in the PAYE code.
In another tale of woe in 2020, AccountingWEB regular Penelope Pitstop highlighted three simple assessments raised against one of their clients, and in each case HMRC got the bank interest wrong.
Designed to confuse
“This latest cock-up around the re-issuing of paper simple assessments, where the tax debt has already been paid, is yet another example of an HMRC project not being fully thought through before implementation,” commented AccountingWEB consultant tax editor Rebecca Cave.
We have seen this time and again when a new piece of the tax compliance mechanism is bolted onto the existing machinery, without working out how the two functions will mesh together. Other examples include:
- the High Income Child Benefit Charge
- Real Time Assessments for capital gains tax (CGT)
- the UK Property Account – assessing and paying CGT within 60 days
- transferable marriage allowance.
Have your clients been asked to pay the same simple assessment twice? Let us know in the comments below.