As storm Brendan raged across the country last month, HMRC were advising taxpayers not to let the 2018/19 self-assessment deadline peck away at them. HMRC also issued a special agent update self-assessment edition and a reminder to taxpayers subject to the annual allowance charge that this must be included on their self-assessment return.

The 2018/19 online self-assessment deadline was 31 January 2020. This was also the deadline for making the balancing payment of tax and national insurance for 2018/19 in addition to the first payment on account for 2019/20. 2017/18 SA returns must also have been amended by this date. Information on time to pay arrangements has also been published.

The below update has also been provided by HMRC in respect of their previous “nudge” letters to encourage recipients and their agents preparing 2018/19 tax returns to check that they are correctly reporting both Excess Reporting Income (“ERI”) and Offshore Income Gains from their offshore fund investments. HMRC are also asking recipients to consider returns already submitted for 2018/19 and earlier years.

“Update from HMRC specialist

Managers of offshore reporting funds are already required by Regulation 92 SI 2009/3001 to make available to investors the amount of ERI. This is often done as a per unit figure from which the investor/agent has to calculate their amount and generally is published on a website rather then sent to the agent, which would of course require the investor to know where to look and to calculate their share are work out which year it relates to. Again, this is something that should be made known to them, but in some instances where the investment is through an intermediary the intermediary may not pass the relevant information on to the investor (the fund will not know who the beneficial owner is).

I think it is likely that is where the problems usually lie, however it would not be possible for the fund to give that information directly to the investor as they would be unlikely to know who they are. I think it is reasonable to expect those who invest in offshore funds to ensure they make themselves aware of the tax consequences of doing so, and to seek advice if necessary.

They can check if the fund is a reporting fund here https://www.gov.uk/government/publications/offshore-funds-list-of-reporting-funds. If it is, the investor or their adviser must ensure that they obtain the necessary information, which might mean they have to ask the intermediary but usually I think the ERI information will be publicly available.

HMRC have published guidance on the treatment of UK taxpayers invested in offshore funds here https://www.gov.uk/hmrc-internal-manuals/investment-funds/ifm13000.”

Prior to the 2018/19 filing deadline, HMRC published a list of the most bizzare excuses and expense claims from the last ten years. Pets, witches, djs and yachts all feature in the news release. But the underlying message was serious – file on time and don’t make spurious claims for non-qualifying expenses.

HMRC also published an update for agents preparing self-assessment returns which are covered by one of the online filing exclusions for 2018/19.

“Below is some information to help you support your customers should they be impacted by an Exclusion and contact you for advice. There are no changes to the advice we provided for 2017–18, however we are sorry that we are late in sharing this with you.

All Self Assessment customers need to file their 2018–19 return, make a balancing payment for 2018–19 and their first payment on account for 2019–20 by 31 January 2020 (if appropriate).

We are aware, however, that if a customer is affected by an exclusion they won’t be able to file online or get an accurate self-assessment income tax liability calculation for 2018–19.

In this instance customers should:

• file their Self Assessment by paper return, along with a completed reasonable excuse claim by 31 January 2020.
• make a reasonable effort to estimate their income tax liability for 2018–19 based on the information they have.
• make an appropriate balancing payment for 2018–19 and their first payment on account for 2019–20 by 31 January 2020.

Providing the return and payments are received by the deadline of 31 January 2020 HMRC will not charge a late filing penalty, late payment penalty and /or interest on the estimated amounts. 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.

We will contact those customers who have needed to estimate their balancing payment to confirm their actual income tax liability. If this results in an additional amount being payable customers should pay any new amount due within 28 days of the notification to stop interest being added. As yet, we do not have a date for when this contact will be made.

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

• file their Self Assessment return online by 31 January 2020
• pay their estimated balance for 2018–19 Self Assessment and their first payment for 2019–20 by 31st January 2020

HMRC will subsequently:

• identify any cases filed online where the calculation is incorrect
• make any required correction to the income tax liability calculation for 2018–19 and 2019–20 payment on account
• inform the customer of the correct income tax liability calculation for 2018–19 and any revision to 2019–20 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.

For further information please ask your customers to speak to their tax adviser, or use our SA110 notes and SA150 How to fill in your tax return. Customers can also contact HMRC if they receive any penalties or accrue interest in this case.”

HMRC have asked us to share the below information which may be relevant to agents and taxpayers affected by the disguised remuneration loan charge legislation.

“On 20 De‌ce‌mb‌er 2019, the independent loan charge review was published along with the government’s response on G‌OV‌.U‌K. HMRC also published guidance on GOV.UK on the key changes to the loan charge policy and what this means for customers.

On 20 Ja‌nu‌ar‌y 2020, the government published draft legislation to implement the changes to the loan charge as recommended by the independent review. Further guidance has also been published which provides more details of the changes, including the self-assessment process.

If any of your clients are affected by the loan charge, then we would advise you to review the latest guidance and discuss with your clients any changes they may need to make to their return. The new guidance can be found on GOV.UK.”

HMRC has also published the following recently which is relevant to taxpayers and their agents affected by the disguised remuneration loan charge:

• Implementation of changes to the loan charge
• Disguised remuneration: independent loan charge review
• Find out how the changes to the loan charge affect you