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Where Taxpayers and Advisers Meet

6 year allowance to revise SA returns

someone
Posts:688
Joined:Mon Feb 13, 2017 10:09 am
Re: 6 year allowance to revise SA returns

Postby someone » Thu Nov 02, 2023 9:49 am

It's hard to imagine how changing income from dividends to PAYE can trigger a huge tax refund. The only two things I can think of are S455 on an overdrawn DLA and RAS pension contributions without sufficient relevant income. (Not saying there aren't more, just that I don't know what they could be)

I'm not sure whether unlawful dividends end up as a directors loan or not. But surprising that your accountant didn't flag this up at the time if there were dividends without sufficient distributable reserves. Some information here: https://www.accaglobal.com/uk/en/technical-activities/uk-tech/in-practice/2021/may/avoiding-pitfalls-unlawful-dividends.html

I'm pretty sure directors with that sort of salary must run a payroll (but perhaps that requirement was different 6 years ago). In which case it's very hard to understand how the accountant got this wrong unless you had a different accountant for the company and for your personal tax and didn't give your personal tax accountant your P60 or company accounts.

If this income really was salary, this is not an attempt to rewrite history, and the accountant who did your personal tax return had all of the relevant information, then you might have a professional negligence claim against them. But remember that ultimately it's your responsibility to check your tax return and your accountant should have sent you a copy to review before submission. You'll at least have to have a plausible reason why your accountant could miscategorise your PAYE as dividends but you didn't notice when you checked your tax return.

Note also that there is absolutely no discretion to rewrite history and change a tax return. If you've taken dividends rather than salary from the company then you cannot recategorize it later in order to reduce your tax, even when the tax return is still open for amendments.

There should plenty of paper-trail showing PAYE income or dividends. Not least, I think the company will have been paying NI on your salary six years ago, so it ought to be completely clear what the facts are from the company PoV.


I agree with bd that absent some other information you're not giving us here (like, for instance, that the HMRC enquiry was into the company and they've changed the way your income was received from the company but not made a similar change to your personal tax return - which might count as an HMRC error, I'm not sure) I don't think you've any chance of changing your tax return now. But if the facts are completely unambiguous and no reasonable accountant would have entered your salary as dividends, then you might have a negligence claim against your accountant. I would suggest in this case that the first step would be to get another accountant to review all the information and confirm that this clearly was salary and not dividends and your accountant ought to have known that and then you're going to have to go the legal route. (It would also help if HMRC are in agreement that this was salary rather than dividends - although a bit mean to have opened an enquiry into your tax return and then not corrected all the mistakes on the tax return, only the ones in their favour - not sure what the legal position is though, they might be entitled to do this)

MattMan10
Posts:10
Joined:Mon Nov 25, 2019 11:07 am

Re: 6 year allowance to revise SA returns

Postby MattMan10 » Sat Nov 04, 2023 1:20 pm

How about Special Relief?

MattMan10
Posts:10
Joined:Mon Nov 25, 2019 11:07 am

Re: 6 year allowance to revise SA returns

Postby MattMan10 » Sat Nov 04, 2023 5:05 pm

Have been reading about Special Relief - might that be an avenue?
For years 17/18 and 18/19 I have £60k to reclaim so its not trivial amounts...

MattMan10
Posts:10
Joined:Mon Nov 25, 2019 11:07 am

Re: 6 year allowance to revise SA returns

Postby MattMan10 » Sat Nov 04, 2023 5:15 pm

There are most certainly other issues at play here - not least negligence on my accountant. I'll cover that when I need to - but for now I'm trying to at least get the old returns sorted.

I think HMRC accepted the 19/20 returns (£25k refund) but I've not had that confimred yet - other than them not immediately rejecting that return on time grounds which they have for 17/18 and 18/19.

Essentailly what has happenned is my accountant messed up the final year of trading and reported PAYE earnigns instead of divdends. This was wrong and lead to a very large PAYE bill. HMRC (different dept than SA) now wont accept revised company accounts which correctly show dividends. This kind of invalidates SA returns from that period as they are now at odds with PAYE vs Dividends.

So becuase HMRC wont accept revised business accounts - I need to revise SA returns. HMRC only recently told me they wont accept revised business accounts (from 2017/18) which is why I'm only just now trying to revise older SA returns.

bd6759
Posts:4239
Joined:Sat Feb 01, 2014 3:26 pm

Re: 6 year allowance to revise SA returns

Postby bd6759 » Sun Nov 05, 2023 11:00 am

Hello,

I have tried to make an amendment to my 18/19 SA return as my accountant incorrectly submitted my earnings as dividends instead of PAYE.

Essentailly what has happenned is my accountant messed up the final year of trading and reported PAYE earnigns instead of divdends. This was wrong and lead to a very large PAYE bill.

You need to make your mind up! Final year? Salary or dividend?

Whatever it is you did wrong, you cannot rewrite history.
Your company accounts have been signed, approved and submitted.

Have you thought about the additional corporation tax that would be payable if you change salary to dividend. If you insist that you did not get a salary, your company accounts are incorrect and understate the profits. HMRC can assess that difference, but still do not need to repay any SA tax you paid.


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