Representation Tax 2013/10

The Northern Ireland Tax Committee of Chartered Accountants Ireland briefly wishes to comment on the above consultation document published 11 July 2013.

We have considered the specific consultation proposal that HMRC will increase the size of debts that can be recovered through coding out from those with higher incomes by replacing the current single scale with a graduated scale of limits. This would mean:

• no change to the maximum of £3,000 that can be coded out for those earning less than £30,000; and
• introducing a graduated, income related scale for earnings of £30,000 or more so that a maximum of £17,000 can be coded out for a person with earnings of over £90,000.

In principle we have no issue with the proposals and we would be supportive of these in the current economic climate as this would allow taxpayers who have underpaid tax to pay the tax owed over the following tax year rather than having to fund a large single payment.

However we wish to seek assurance that HMRC do not and will not in future use the coding out system to collect their measure of tax due on estimated amounts of investment income (e.g. property income). We are aware of cases where individual tax codes have been adjusted for anticipated tax due on such income. This effectively changes the basis of tax on property income and other investment income sources to PAYE which is not the purpose of coding out. Coding out should only collect tax debt actually due and payable as determined through the self-assessment system. The definition of debt is therefore crucial and this is absent from the consultation document in its current form.

Do not hesitate to contact Brian Keegan or Leontia Doran should you require anything further.

Yours sincerely,

Paddy Harty

Chairman

Northern Ireland

Tax Committee

Chartered Accountants Ireland

Source: Chartered Accountants Ireland. www.charteredaccountants.ie