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Self-employed workers in the UK have reported their struggles to acquire a mortgage, after HM Revenue & Customs (HMRC) changed the way it issues details of tax calculations and tax year overviews for submission with mortgage applications.

Until recently accountants and workers themselves have been able to obtain a paper copy of form SA302 that lenders require in order to complete the mortgage application process.

However, from 4 September 2017 HMRC has confirmed that it will no longer issue paper copies and will instead provide digital versions.

This will make the process of securing a mortgage more difficult for self-employed workers and may even further restrict the number of lenders that will offer a mortgage, with reports already coming in of lenders insisting on original paper copies rather than electronic printouts.

Self-employed individuals and their advisers will be required to supply the relevant year’s tax computation, printed from the adviser’s software, along with the tax year overview that advisers can print from HMRC’s online services website, in order to act as a self-serve SA302 that will satisfy lenders.

HMRC has already undertaken discussions with UK Finance, formerly the Council of Mortgage Lenders, about lenders’ requirements. However, the list of lenders who will accept self-serve SA302 forms omits some big high street names.

Many accountants are therefore reminding self-employed individuals to check their lender’s requirements early on in the mortgage application process.

LINK: SA302 Tax Calculation

New analysis of HM Revenue & Customs’ (HMRC’s) data has revealed that the department collected an additional £3.4 billion from small and medium-sized businesses in the tax year to April 2017.

Investigations in the 2016/17 tax year by HMRC’s compliance department saw 49 per cent of the additional revenue collected come from VAT investigations into SMEs – an increase of four per cent on the previous year, according to PfP who conducted the study.

In the last few years, the Revenue has doubled its efforts to crackdown on tax evasion perpetrated by SMEs and has expanded a number of its teams to help with the search.

Unfortunately, this has placed additional pressure on small businesses to get their affairs in order to avoid small mistakes, which could lead to costly investigations.

Alongside its investment in additional compliance staff, the Revenue’s new super computer, Connect, has increased its ability to find discrepancies after being given access to files held by banks and other financial institutions based in British Overseas Territories.

The system is also able to search social media and other less conventional sites to identify possible signs of non-compliance.

LINK: PfP Study into VAT evasion

A new online forum has been launched by HM Revenue & Customs (HMRC) which has been designed to help company owners resolve simple issues related to starting and growing a company.

The new website provides a message board, discussions and a webchat where business owners can query HMRC’s tax experts in real time.

Categories listed on the site currently include starting, managing and growing a business, with a separate area for tax reliefs.

In an official statement, Mel Stride, Financial Secretary to the Treasury, said: “The UK’s 5.4 million small businesses play a vital role in our economy. We want to help businesses get off the ground and support them as they grow.

“That is why we are launching a new forum and webchat service which will give these companies useful hints and tips – including how to complete tax returns, grow a business and trade outside the UK – so that they can continue to flourish.”

While many have welcomed this new avenue of contact with HMRC, there are concerns that the advice provided may not be specific enough to rectify each business’s unique issues and many are recommending that it is used alongside other professional advice from accountants.

LINK: HMRC Forum

Taxpayers across the UK will have begun to receive a simple assessment (form PA302) from HM Revenue & Customs (HMRC), which will ask for payment of tax that cannot be coded out under PAYE.

A simple assessment is a tax assessment made by HMRC, which was launched with the aim of taking taxpayers out of the self-assessment regime where they have a small amount of income or gains which is not taxed under PAYE. These taxpayers will have begun to receive a simple assessment from mid-August 2017.

However, if the taxpayer has received notice to file a self-assessment tax return, HMRC must withdraw that notice before issuing a simple assessment to the taxpayer. HMRC has up to four years from the end of the tax year to issue a simple assessment.

This has led to concerns from some pensioners with income that just exceeds their personal allowance. They remained under the self-assessment regime for 2016/17, but HMRC have said they will be taken out of self-assessment and put into the simple assessment regime for 2017/18.

If a taxpayer receives a simple assessment (PA302 form) they have up to 60 days to query it or such longer period as HMRC allows.

It is vitally important that anyone who receives an assessment contacts HMRC within this period if they have concerns, as after this date assessments become binding and the tax liability becomes payable.

Normal tax payment dates will still apply, but if the simple assessment is issued after 31 October following the tax year, the tax will be payable three months after the date of the assessment.

LINK: Income Tax: simple assessment

From July this year, HM Revenue & Customs (HMRC) has been utilising its new system of dynamic coding, which allows for in-year adjustments (IYAs) of a person’s tax code.

Under the new regime, codes can be adjusted by the Revenue to reflect sudden changes in an employee’s circumstances as soon as HMRC becomes aware of the changes, rather than waiting to reflect this in the following tax year.

In order to make the IYAs, HMRC relies on two important concepts, estimated pay and trigger points, to calculate the new code.

Estimated pay is effectively a person’s annualised year to date pay and this is used to perform the calculations to arrive at the new tax code. The same procedure is used for monthly paid employees, but based on average monthly income.

However, the PAYE code will only be amended if employers notify HMRC of a trigger point, where an employee’s circumstances have changed.

This could include an individual changing their personal tax account, or an employer notifying the Revenue of a change, which will typically take place during a payroll report or through a number of different forms.

Bonuses and one-off payments must be included in an employee’s estimated income for the year. However, many are finding that current payroll software does not contain a facility to tell HMRC that a payment is a one-off, which has led to the misinterpretation of payments.

In response, the Institute of Chartered Accountants in England and Wales (ICAEW) is warning employees and employers to check their tax code where a bonus or one-off payment has been made to ensure it doesn’t cause unwarranted restrictions of personal allowances or overpayments of tax.

LINK: HMRC’s guidance on tax codes