HMRC reveals online exclusions days before deadline

As everyone is no doubt aware, there have been difficulties this year with the 2016/17 tax calculation.  All software developers are affected as we all work from a specification supplied by HMRC.

The development team at Keytime have worked hard to deliver software updates to fix these calculation problems as they have come to light.  However, we have recently become aware that there are further scenarios where the calculation gives an incorrect liability.  An updated list (as of 24 January) of specials and exclusions can be found here.  It is worth noting that some cases can still be filed on-line. Our advice at this late stage is to file on-line if you are able to and it may help your case at a later date if you note the problem in the additional information box on page 7 of the main tax return.

HMRC have announced that they are unable to fix any further problems with the calculation before the 31 January deadline, and realistically it would be difficult for our team to deliver any further fixes in time.  HMRC have indicated that they expect less than 1% of returns to be affected, nevertheless, they have issued the following information should you find you are affected. 

 In this instance customers should:

  • file their Self Assessment by paper return, along with a completed reasonable excuse claim
  • make a reasonable effort to estimate their income tax liability for 2016-17 based on the information they have
  • pay their estimated balance for 2016-17 Self Assessment and make their first payment for 2017-18 by 31st January 2018.

Should their income tax liability calculation for 2016-17 be too low, or the deadline of 31 January be missed because of an exclusion, HMRC will not apply late filing, late payment penalties and/or interest. Where we have been unable to stop the automatic issue of these we will accept being affected by an exclusion as a reasonable excuse and the penalties will be withdrawn. From February 2018 we will contact those customers who have needed to estimate their balance payment to confirm their actual income tax liability. 

Where a customer is uncertain if their circumstances match an exclusion and their software allows successful online submission, they should:

  • still file their Self Assessment return online  
  • pay their estimated balance for 2016-17 Self Assessment and make their first payment for 2017-18 by 31st January 2018

 HMRC will subsequently:

  • identify any cases filed online where the calculation is incorrect
  • make any required correction to the income tax liability calculation for 2016-17 and 2017-18 payment on account
  • inform the customer of the correct income tax liability calculation for 2016-17 and any revision to 2017-18 payment on account
  • advise when the revised amounts need to be paid
  • inform customers that they will not have to pay late payment penalties and/or interest attributable to any additional amount arising from the correction if it is paid before the revised due date.