Simple assessments

This article was first published on the Bloomsbury Professional tax blog on 15 February 2024.

Where HMRC consider that individuals with straightforward affairs owe tax, the department can issue ‘simple’ assessments. Typically, the letters will go to those on PAYE including individuals who receive pensions or have more than one employment.

The simple assessment regime came in in Finance Act 2016 although the issuing of assessments was paused in May 2018 due to Brexit and then Covid-19. Under normal rules, HMRC has four years from the end of the tax year in question to issue an assessment if the taxpayer has taken reasonable care and the same rules apply to simple assessments.

Typically, individuals receiving these assessments are in multiple employments and/or on PAYE and therefore are unlikely to be well versed in tax law. The amounts at stake may also be insufficient to justify the cost of professional advice if the individual is unsure of the position. Recently, I have seen instances where HMRC Debt Management has claimed an outstanding debt in relation to 2016/17 where the taxpayer never received a simple assessment. Moreover, HMRC does not have any evidence to show that the amount is due.

With this in mind, I decided it was time to write an article with top tips for taxpayers receiving a simple assessment:

1) Who is the letter from?

A letter from Debt Management is different to an assessment and does not mean the figures have been checked and are correct. If you have not received any assessment, then ask for a copy of it. Without (evidence of) an assessment being raised, arguably, no tax is due.

2) On the assessment, check the tax year the payment relates to and the date of the letter.

If the letter is dated more than four years after the end of the tax year (e.g. after 5 April 2021 for the tax year 2016/17) then HMRC is out of time to assess.

3) Check the calculations are correct – HMRC does not always get it right.

If the amount due is less than £3,000, in most cases, this can be collected via an adjustment to your tax code. If this is the case, check your tax code as well!

If you are at all unsure about whether the assessed amount is due, you have 60 days from receipt of the assessments to raise a query. HMRC does not have a deadline by which to respond so in the appeal, request postponement of collection of the alleged debt until such time as agreement is reached.

Finally, it is better to request assistance than assume HMRC has got it right. Many advisers will provide a review of the computations and advice on how to proceed for a fixed fee. In the event HMRC has got it wrong, it is often harder to reclaim tax paid than to pay the correct amount in the first place!

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