HMRC have asked us to share their update briefing on the 2016–17 self-assessment online filing exclusions. We urge anyone involved in preparing self-assessment returns to ensure they read the briefing and consider the implications for their client portfolio.

“Changes from Personal Savings and Dividend Taxation Reform effective April 2016, mean that it is more beneficial for some customers to allocate some of their Reliefs and Allowances against dividend income before savings income.

HMRC implemented changes that have enabled the majority of customers with savings and dividend income to receive the most beneficial calculation. However, for a small percentage of customers, the calculation is not correct. We are sorry for the problems this has caused.

HMRC is committed to helping customers file online for 2016–17 and has been in discussions on this with agent representatives and software developers. In October we will make changes to the 2016–17 calculator in-year, across our systems and interfaces to address the errors. This will enable affected customers to be able to file online and receive the correct calculation.

The fix will correct Exclusions 48 to 56 and 58 to 59 which cover the majority of cases.

We will also automate the recovery of all cases where a return has already been filed, but shows the incorrect tax position for the customer. This will include all customers whether they have filed online or on paper.

Until then you will have the option to:

• await the implementation of the fix in October 2017 and then file online
• continue to file online if your current software allows you to do so
• file a paper return (with a covering letter identifying the Exclusion).

Please note:

A paper return, which cannot be filed online due to an Exclusion, is delivered on or before 31 January of the tax year to which the return relates, will have the automatically generated penalty cancelled if a reasonable excuse claim accompanies the paper return or the reasonable excuse form found at Self Assessment: reasonable excuse for not filing return online – GOV.UK.

Your feedback, the questions and observations from software developers, together with our testing, have given assurance that the proposed changes to the calculator will produce the most beneficial calculation for customers.

The solution will ensure that customers can file online and be confident that if they file before the fix is implemented, we will correct the initial calculation.

A full brief will appear in the August edition of Agent Update.”

END OF HMRC UPDATE