HMRC reveals raft of online exclusions and changes just days before Self-Assessment filing deadline

Date Published: January 25, 2018

Category: HMRC News, Self Assessment

HMRC SA online exclusions revealedFollowing our announcement yesterday about fresh HMRC exclusions impacting on this year’s Self-Assessment Online filing, HMRC has now published the detail and has advised tax software developers to alert their customers.

Just days away from the Self-Assessment online filing deadline, HMRC have issued a new exclusion update. It not only introduces 5 more complex exclusions the BTCSoftware team had suspected, it also updates 12 exclusions which have already been built into third party tax software.

Issuing the exclusions so late in the filing season gives software developers like BTCSoftware no chance to implement, properly test and release these in advance of the January 31st deadline. Software developers could try to rush a release out but there’s always a risk when updating SA software this late in January.

However, BTCSoftware will build these into our software in future and then run a retrospective check on all 2017 returns to highlight which taxpayers require a re-calculation by HMRC.

HMRC, in their release state a fraction of 1% of tax returns will be affected. Based on HMRC’s figures of over 10,000,000 self assessment tax returns filed in 2016, we can calculate this to be as many as 100,000 taxpayers.

Read the latest Exclusion update from HMRC


Further guidance from HMRC

HMRC have also asked software developers to alert their customers with this message…

All Self Assessment customers need to file their 2016-17 return, pay their balance for 2016-17 and make their first payment for 2017-18 by 31 January 2018.

As you know each year there are a small number of customers who are affected by exclusions and who are therefore unable to file online or get an accurate Self Assessment income tax liability calculation for 2016-17. Our forecasts suggests that exclusions for 2016-17 will only impact a very small proportion of SA customers (a fraction of 1%)

In this instance customers should:

  • file their Self Assessment by paper return, along with a completed reasonable excuse claim
  • make a reasonable effort to estimate their income tax liability for 2016-17 based on the information they have
  • pay their estimated balance for 2016-17 Self Assessment and make their first payment for 2017-18 by 31st January 2018.

Should their income tax liability calculation for 2016-17 be too low, or the deadline of 31 January be missed because of an exclusion, HMRC will not apply late filing, late payment penalties and/or interest. Where we have been unable to stop the automatic issue of these we will accept being affected by an exclusion as a reasonable excuse and the penalties will be withdrawn. From February 2018 we will contact those customers who have needed to estimate their balance payment to confirm their actual income tax liability.

Where a customer is uncertain if their circumstances match an exclusion and their software allows successful online submission, they should:

  • still file their Self Assessment return online
  • pay their estimated balance for 2016-17 Self Assessment and make their first payment for 2017-18 by 31stJanuary 2018

HMRC will subsequently:

  • identify any cases filed online where the calculation is incorrect
  • make any required correction to the income tax liability calculation for 2016-17 and 2017-18 payment on account
  • inform the customer of the correct income tax liability calculation for 2016-17  and any revision to 2017-18 payment on account
  • advise when the revised amounts need to be paid
  • inform customers that they will not have to pay late payment penalties and/or interest attributable to any additional amount arising from the   correction if it is paid before the revised due date

Attached is the v9.0 of the Exclusions for 2016-17 which will provide all the known exclusions to date.  Please note that this is for guidance only to give certainty and advise customers if they fall under an exclusion. As mentioned above, customers are advised to file online and HMRC will make the required correction to their income tax liability calculation for 2016-17 and 2017-18 payment on account.

For further information please ask your customers to speak to their tax advisor, or use our SA110 notes and SA150 How to fill in your tax return. Customers can also contact HMRC if they receive any penalties or accrue interest due to exclusions.

We are aware that some of these issues will impact 2017-18 and we are currently devising a strategy to address these.


Helping our customers

The BTCSoftware team are committed to helping accountants navigate what has become a highly challenging Self-Assessment filing season.  Our support teams are on hand supporting our customers, and our developers have started to respond to the new Exclusions and the fresh updates which were announced by HMRC yesterday evening.

Rest assured we will build these into our software in future and then run a retrospective check on all the 2017 Individual Tax returns our customers have created and highlight the returns which HMRC need to recalculate.

If you have any queries about your Self-Assessment software or want to learn more about the approach we’re taking contact the BTCSoftware team on tel. 0345 241 5030.

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