Tax agents and accountants will soon receive warning letters from HMRC alerting them to inaccuracies in their clients' self-assessment tax returns for the 2021-22 tax year. The discrepancies primarily pertain to the High Income Child Benefit Charge (HICBC) and extend to P11D expenses claims and P14 end-of-year employee reports submitted by employers.
HMRC initiated a cross-referencing exercise to identify cases where taxpayers were claiming child benefit but failing to pay the annual charge associated with it. Specifically, HMRC is focusing on high earners with incomes exceeding £50,000 who are claiming child benefit and have made errors related to the additional child benefit charge.
ACT's Campaign to Identify Reporting Errors
HMRC's agent compliance team (ACT) began sending out these letters on October 2nd, and the campaign will continue throughout the month. Importantly, the letter is not a trigger for opening a formal enquiry or compliance check.
In the letter, HMRC states: "We have identified discrepancies in some of your clients' returns that you submitted for 2021/22 compared to the information submitted by your clients' employers or with the information held on HMRC's systems around child benefit."
The Chartered Institute of Taxation explained, "The objective of the exercise is to work with the agents so they can agree with their clients a voluntary amendment program to rectify the errors made in their returns as may be required."
"The letter makes it clear this is not a formal enquiry or compliance check."
Deadline for Amending 2021/22 Returns
While the deadline to amend 2021/22 returns is January 31, 2024, HMRC aims to address these issues promptly. The letters clarify that no penalties will be imposed if voluntary amendments are made by the January 31, 2024, deadline. However, if amendments are not made, HMRC will review the situation and consider issuing a discovery assessment along with penalties.
HMRC requests that agents send a spreadsheet via email after making amendments to outline the changes or provide reasons for not making amendments. Agents should consider client confidentiality when sending a single spreadsheet containing details for multiple clients.
This activity builds on a similar letter sent to some agents last year. However, HMRC has taken feedback into account and is no longer including a redacted 'client list' with the initial letter.
The P14 forms, used by employers to report information to HMRC, must be submitted electronically. This includes details such as the tax year for the return, total relevant payments made by the employer during the tax year, and total net tax deducted for those payments.
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