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HMRC issuing large numbers of PAYE tax calculations has put tax in the headlines recently. LITRG gives a reminder of this and other issues to think about this month.

Tax – it’s never-ending

In the tax world, a month never passes without there being something to consider, depending on your situation – whether you are an employee paying tax under PAYE, filing self-assessment tax returns, a tax credits claimant, or even all three!

Filing your 2009/10 self-assessment tax return on paper? Act quickly

As noted in our recent article, remember that the 31 October paper filing deadline is fast-approaching for most self-assessment tax returns for the year ended 5 April 2010 (the exception being some returns issued late, for which recipients should have two months from the date of issue to file on paper or three months to file online).

… or filing online?

If you wish to make the move to online filing, you of course still have until 31 January 2011 to get your return in, but even so it is worth making a start on gathering together the information you need. If using HMRC’s online filing facility, you do not have to complete the whole return at once – you can enter the information you do have available and save progress to finish it off later.

Keep a record

You should always keep records accompanying the entries on your tax return (eg, invoices, P60s, bank statements and other supporting information) and a note of how you calculated the figures. On top of that, we recommend you keep a copy of the finished return before you submit it and paper filers are advised to send it via registered post or at the very least ask for a proof of postage from the Post Office. That way, should HMRC say they never received your return, you have a back-up copy and some evidence to help you appeal against a late-filing penalty.

You could hand-deliver your paper tax return if you do manage to locate one of HMRC’s remaining Enquiry Centres which is open at a time convenient to you. However, HMRC will not give you a receipt for it (and despite recent efforts, we have had no success in persuading them to change their policy on this). If you do therefore hand-deliver your return, we would suggest again keeping a photocopy of the form and writing on it where you took it to and the date and time. If you speak to an HMRC staff member at the time, perhaps also take a note of their full name.

Income tax – have you received a ‘P800’ tax calculation?

As we have reported in several recent news items, HMRC have been issuing tax calculations in recent weeks to PAYE taxpayers who hitherto might have had little direct contact with the tax system. The ‘P800’ calculation might show that you owe some tax or that you are due a refund. Whichever of these is the case, you should first check the calculation and ensure you are happy with it or query it with HMRC if you are in any doubt. If it shows you owe tax, consider whether you can argue that you should not have to pay it. Follow our most recent guidance for help.  

Do HMRC have your up-to-date details on your tax record?

One of the problems with HMRC’s reconciliation of PAYE tax records referred to above might be that they do not have your up-to-date home address on the system, particularly if you have moved recently or frequently, as in the case of students for example.

If you are unsure whether HMRC do have your correct address details, we suggest you contact them to check (see useful links below for how to locate your tax office). You could, for instance, miss out on (or experience a delay in receiving) a tax refund if one is sent to the wrong address.

Certain changes, such as a new address, can be notified to HMRC by email. Have a look at their website (see useful links below) to find out how.

Tax Credits – confirm your estimated income

Each year, HMRC send renewal forms to tax credit claimants. The deadline for renewing 2009/2010 claims was 31 July 2010. Some claimants, for example those who are self-employed, may not have known their 2009/2010 income by that date and may have provided HMRC with an estimated income.

As above, you may now be finalising those figures when you are completing your self-assessment tax return, so remember to tell the Tax Credit Office your actual income for 2009/2010 either by confirming the estimate you gave was correct or by giving them the actual figure. You must do this by 31 January 2011 otherwise HMRC will finalise your 2009/2010 claim using the estimate which may turn out to be incorrect and which could also lead to your 2010/2011 claim being wrong.

Have your tax credit payments stopped?

Each year, most tax credit claimants are required to renew by completing ‘renewal’ forms or telephoning the helpline and giving or confirming details of their income and circumstances over the year. This process finalises the claim for the year just ended and act as a claim for the new tax year. The deadline for 2009/2010 renewals was 31st July 2010. If HMRC did not receive your renewal papers or you did not renew by phone by that date, it is likely that HMRC will have ended your claim and sent you a statement of account explaining why the payments have stopped and detailing any overpayment.

See our August article for more information about renewals. Remember, even if you don’t want to continue claiming, if you have received forms from HMRC you must complete them otherwise you may find yourself with an overpayment.

The advice we give above about keeping independent evidence of postage is even more important with tax credits, as tax credits correspondence often goes astray when it reaches HMRC. Also, HMRC are notoriously reluctant to give the claimant the benefit of the doubt when that happens.

Normally, you have 30 days from the date on that statement of account to contact HMRC and have your claim reinstated. Due to the heavy call volumes this year, many claimants had problems getting through to the tax credit helpline to renew. HMRC therefore decided to extend the period during which they will reinstate a claim where the 31 July deadline was missed to 60 days from the date on the statement of account. It is important to take immediate action if your payments stop by contacting the tax credit helpline on 0845 300 3900 (textphone 0845 300 3909).

Are you being paid enough? Check your National Minimum Wage entitlement

And finally, don’t forget that each year on 1 October, the National Minimum Wage changes. The new rules from 1 October 2010 were covered in detail at the end of our September article so low-income workers should make sure they check they are receiving their entitlements, particularly noting that this year there is a new ‘apprentice rate’, and a reduction in the age threshold for the higher ‘adult’ rate – from 22 to 21. 

Useful links

Finding an HMRC Enquiry Centre

Finding your tax office

Reporting changes to HMRC