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Fascinating Facts about Self Assessment

It is now 20 years since the tax authority introduced online tax returns. In 2001, only 38,000 online tax returns were filed and this year, HMRC estimates there will be around 11 million online tax returns, and they are not all from us. Quite an increase, you must admit.

Here are some more HMRC trivia:

  • 96,519 people filed their tax return on 6 April 2020 (first day of the tax year). Our software is not even updated by our supplier until about a month after this.
  • January is fast becoming the submission month of choice for many. In January 2011, 3.4 million taxpayers completed a Self-Assessment tax return online but this has increased to an estimated 5 million in January 2021.
  • this year’s deadline (31 January 2021) is on a Sunday. The last time the deadline was on a Sunday was in 2016
  • last year, the busiest filing day was 31 January with 702,171 returns completed.
  • the peak hour for filing last year was between 16:00 to 16:59 on 31 January when 56,969 customers filed.

HMRC expects more than 12.1 million people to complete a Self-Assessment tax return. Figures released earlier this month revealed that 55% of you have already filed your returns. But that still leaves an awful lot of last minute filers.

Once you have completed your tax return, and know how much tax is owed, you can set up your own payment plan to help spread the cost of your tax liabilities. You can use the self-serve Time to Pay facility to set up monthly direct debits online.

This year, considering the additional pressures caused by COVID-19, HMRC has increased the self-serve Time to Pay threshold to £30,000 to help Self-Assessment customers spread the cost of their tax bill. Interest will be applied to any outstanding balance from 1 February 2021.

To see if they’re eligible, you can visit GOV.UK to find out more about paying through instalments.

Be aware of copycat HMRC websites and phishing scams.

Self assessment scam warning

This is a time of year when scammers are on the prowl for the unwary.

Some accountants have reported their clients receiving scam emails which claim to be from an accountant. Others report emails that look as though they have come from HMRC.

Some scam emails said that HMRC had changed its bank details and asked for money to be transferred to a different account. Fraudsters also included bank details in the emails so money could be transferred.

Do not give out personal information, download attachments or click on links in unexpected text messages or emails. HMRC has published a checklist which can help people identify whether a phone call, email or text message is genuine.

If the contact is unexpected; offers a refund, tax rebate or grant, asks for personal information, such as bank details, is threatening, tell you to transfer money; or have spelling mistakes or the email address looks funny, it is probably a scam trying to con you out of your hard earned cash.

HMRC is also warning people to be aware of websites that charge for government services – such as call connection sites – all connections to HMRC are in fact free or charged at local call rates. Other companies charge people for help getting ‘tax refunds’.

Criminals text, email or phone taxpayers offering spurious tax refunds or threatening them with arrest if they don’t immediately pay fictitious tax owed.  ‘HMRC is a well-known brand, which criminals abuse to add credibility to their scams.’

MPs slam HMRC

MPs have criticised HMRC’s response to the Covid-19 crisis, claiming some groups of taxpayers have been unfairly excluded from support packages, while the department’s strategy for property and IT systems has been shown to be wanting.

A report by the public accounts committee (PAC) acknowledged the ‘hard work and dedication of HMRC staff in rising to the challenge under difficult circumstances’, with more than £80bn provided since March 2020 in support to business and individuals during the pandemic.

However, the committee said quirks in the tax system have left whole groups of taxpayers without the financial support offered to others –even though lockdowns and tier restrictions mean some cannot work at all, and while some large companies that have taken taxpayer support have continued to pay out dividends and high executive salaries.

Those who lost out include some self-employed taxpayers who may have moved onto payrolls because of HMRC’s IR35 rules, but were not employed at the relevant time, and so were not eligible for the Self-Employment Income Support Scheme.

Similarly, some other freelancers, with verifiable employment and tax records visible to HMRC, may also have been excluded from the coronavirus job retention scheme (CJRS). In some sectors, such as the creative industries, it is common for freelancers to work on a series of short-term employment contracts with gaps in between, but the support scheme was not sufficiently flexible to recognise this.

The report recommends that within the next six weeks HMRC should publish an explanation for the reasons why it cannot help those freelancers and other groups that have been excluded from receiving any support and what would be required to determine eligibility for financial support for that group of taxpayers; and consider the support it can provide for those taxpayers that have, due to the IR35 rules, moved onto payrolls and missed out on support from the Covid schemes, for example, by reviewing whether it can use an average of wages in the past three years to determine grants.

The report also maintains that lack of certainty about the Covid-19 support schemes has undermined businesses’ ability to plan effectively and said HMRC needed to improve communications.

In addition, MPs said the Covid crisis highlighted long standing problems with HMRC’s real estate strategy, which was described as ‘woefully out of date’. The report criticised the use of non-breakable long-term property leases, locking government into holding larger properties for longer than needed, saying this risked leaving the department with unwanted office space given the changes in working practice accelerated by the pandemic restrictions.

MPs also said HMRC has spent too much of its IT budget on patching up legacy systems rather than modernising them.  Of the additional costs incurred by HMRC because of the pandemic, the largest element, as of 11 September 2020, was the cost of IT at £53.2m.

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