Chapter 3 Self-assessment – further aspect Flashcards
self assessment - income tax
No payments on accounts are required where either the tax due for the previous year was less than £1,000 or more than 80% of the liability for the year was collected at source.
Claims to reduce PoA – if a taxpayer anticipates their current year liability will be less than the tax due for the previous year, they can ask HMRC to lower payments on account. The individual must make the claim by written notice giving the reasons why it should be reduced. HMRC do state if the reduction is excessive HMRC can charge penalties, if tax is paid late interest is charged.
HMRC may made a discovery assessment on an individual and not a self-assessment. They can do this if they discover an amount that has been omitted, an assessment is insufficient, or relief been given has become excessive.
The time limit for making a discovery assessment is 4 years from the end of the tax year to which the assessment relates. However, if the loss of tax is due to careless behaviour, the deadline is extended to 6 years and if the actions were deliberate it can be 20 years. Where the loss of tax relates to an offshore matter the time limit for making an assessment is 12 years unless the 20-year rule applies.
