HMRC announced in its working with tax agents blog that a fix to the 2016/17 self-assessment tax calculator will be in place by Monday 23 October. This was anticipated, as highlighted in my July blog, as HMRC had said it was considering an in-year fix to the tax computation, to avoid mountains of paper tax returns being submitted after the 31 October paper filing deadline.
The fix will remove the exclusions numbered 48 to 56 and 58 to 59 for 2016/17 SA returns, which HMRC says cover the majority of cases.
However, the new version of the online filing exclusions list for 2016/17 (version five) includes 14 new exclusions, of which four have been created by the October fix. Two of those four knock-on exclusions concern chargeable gains from life policies which are taxed as income and are subject to top slicing relief.
We are therefore being urged by HMRC to hold off filing SA tax returns online until the fix is implemented on 23 October. If the commercial tax return software indicates that a paper tax return is still required, the return will be submitted with a completed SA reasonable excuse form for not filing online. Without this form, a paper tax return received after 31 October will trigger an automatic £100 late filing penalty.
HMRC says it will capture those returns already submitted that contain an error because of these problems and issue a corrected computation on form SA302, together with a letter to the taxpayer. Let us know if you receive any of those correction letters.