Simple Assessment: ‘few to benefit’ from HMRC’s new tax system

HMRC has announced it is bringing in a simpler way to collect tax. Guess what? It’s likely more of us will end up paying too much tax as a result.

Anytime the Government announces it is simplifying something you can pretty much guarantee things are about to get more complicated.

Now HMRC’s new ‘Simple Assessment’ for tax has come under fire for making it more likely people will overpay tax.

The Simple Assessment is a new system where HMRC will use data it already holds to calculate how much tax a person owes and send them a bill, meaning those people won’t have to fill out a self-assessment form.

Initially, Simple Assessment will be used for two groups.

Firstly, people who pay tax via PAYE, have underpaid and can’t have the extra tax taken through their tax code. Secondly, new state pensioners whose income is more than the personal allowance.

These groups will start receiving tax calculations through the post in the coming weeks.

How to legally slash your tax bill

Where problems arise

If you are happy with the amount stated then you pay the bill but, if you aren't, you have 60 days to contact HMRC and dispute the amount.

Sounds simple enough, but a leading accounting and tax advisory group believe it is going to lead to chaos.

“The actual concept makes sense but the UK’s complex personal tax code makes the proposition largely unworkable, few are likely to benefit and it will possibly lead to people paying the incorrect amount of tax,” says Nimesh Shah, a partner at Blick Rothenberg.

The problem is you are relying on HMRC getting its sums right.

“There have been instances where HMRC’s system has got the calculations wrong and resulted in people being penalised,” says Shah.

No-one should assume the figure is correct so you still need to review the return and if you find it is incorrect you only have 60 days from receiving it to appeal.

“The 60-day appeal window sharply shortens the period of time people have to gather the information needed to accurately complete their tax returns,” says Paul Haywood-Schiefer, assistant manager at Blick Rothenberg.

“Rather than having nine months after the end of the tax year to put together their information and check they have everything, the individual is now going to receive a calculation from HMRC at some point, and will then have just 60 days to check it, get any further information from their employers or banks, to then agree or go back to HMRC with amendments.”

Need to contact the taxman? Don't despair! Read our guide to the simplest ways to do so.