Per a previous thread that got muddled with a few other issues, here is some clarity on the issue.
Doing a first time S/A for a client. Got copy of P60 and same details pulled through to my agent account (and in fact clients Personal Tax Account) - Tax taken via PAYE is a little short.
Client does have higher than standard tax code, but this is a fixed allowance that has been in place since 2014 or 2015 and all else on their tax position looks ok (no under/over payments evident and not in S/a, as above, before!
Issue - HMRC say the tax take from the employment is correct.
How do I sort?
S/A without sole trading info = customer will have to pay this shortfall, which presumably HMRC will just send back as a refund.....so I look a tit! Plus then she still owes them money - its just they dont know it!
S/A with sole trader info - I can use year one losses to reduce the shortfall to nil. Still think HMRC will just send back as a refund (I still look a tit) and then I have wasted some of the c-fwd losses for 2020 tax year end (so look a double tit and now costing my client)
I will try phoning HMRC again BUT on the basis of the first call, dont hold out much hope.
I could of course 'white space' it - but does HMRC even look at this?!
Or am I overthinking it.
What would you do?
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Just some random thoughts. The tax code, is that from the P60 or is that what it is currently? If it's from the P60 then I'm surprised HMRC haven't issued a further tax code correction to recoup the shortfall, might be worth checking that.
I would explain to client that your software shows tax outstanding, which can be nullified with the S/E losses, but that HMRC are a law unto themselves and may issue a refund.
Personally I think it will correct itself once the return is submitted, assuming HMRC haven't corrected the code since. Don't quote me on that though!!
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
Hi John
The tax code is from the P60 for tax year end 2019. The tax code for 2020 shows the same uplift for just the allowable expenses, I was expecting a further uplift to catch the shortfall from the payroll. I have already phoned HMRC and they categorically stated they cannot see a shortfall at their end and that the only change to the tax code is for the expense items (and because they consider the payroll tax is correct that they wouldnt change the tax code!)
I am going to try phoning them again.
Thanks for your thoughts!!!!
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
I re-tried HMRC and got someone willing to provide more info.
Its a week 56 issue!!
Obviously wouldve been coded out had they not been in SA, but our manual and software calcs are indeed correct (which we knew!) and HMRC were wrong on their first call! h so annoying to waste so much time though. This should be flagged on our Agent accounts (as should it show what is behind the tax code) and a PTA! The former is a wish list (aint never gonna happen) the lack of it on the latter makes the thing totally pointless/redundant!
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Agree that it should show up on the PTA at least but yes, it would have also been nice to see it on the agent bit as well.
As a complete aside, one of my clients has a £200+ rebate showing on my agent account. Before telling him I checked with HMRC because I've had it before where its been an error on their part. Allegedly they had overpaid on 17-18 tax. Mentioned it to client who was mystified as well. I then remembered he'd claimed marriage allowance last year and that was the 17-18 rebate. The agent account told me absolutely nothing as to where this rebate had come from or indeed what was paid/owed since the new dumbed down version has come into play.
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
Ive come to the conclusion John that you should ring HMRC at least twice with any queries because generally you get one half assed response and one really helpful one. Drives you mad. At least with the agent line they answer quite speedily, so once youve answered their million and one questions about a client to ID them the call can be dealt with swiftly.
Oh and week 56 is an extension of a week 53 issue, which I have seen before.
Week 56 relates to four weekly paydays - a situation arises when there is an extra payday in the year, but with 4 weekly ones its apparently only every 22 or 23 years (Ive not checked the latter stats!!). In 2018-19 there were 14 payments rather than the usual 13, so the final payment is called week 56 (its week 53 for weekly, week 54 is for fortnightly). The problem occurs because the way the annual personal allowance is spread is via 52 weeks. What is doubly annoying in this case is that the client got a tax rebate via her payroll in the prior paypacket due to doing considerably less hours! Nil paid in week 56, so owes small amount of tax. Normally HMRC would code this out and usually isses a P800 to the cleint - this wouldve occured in this instance but timed to perfection as client set up her S/T business so it will pick up via S/A.
Given its all computer calculated and RTI'd these days Im not sure why they cannot cut some of these issues by allowing software to spread the allowance load, albeit this wouldnt help when folk change jobs.
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
