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HMRC delays in processing returns

HMRC delays in processing returns

Where self assessment tax returns are filed with HMRC, these returns are usually processed within a few days.  However, there are reports that up to 30,000 tax returns for the 2016/17 tax year have still not been processed by HMRC, despite the 31 January deadline for filing the returns having passed some 10 months ago.

Excluded from online filing

HMRC can only accept returns for online filing where certain criteria are met. Where HMRC accept that a return conforms with tax law but does not meet their online filing criteria, the reason for not meeting the criteria is known as an ‘exclusion’.

For the 2016/17 tax year, there were a high number of exclusions and returns which featured those exclusions had to be filed on paper by post with HMRC.

As the number of exclusions increased over the tax year, some of these returns were submitted electronically before the exclusion was announced by HMRC. When these returns were processed by HMRC, an incorrect tax computation would have been issued.

HMRC is now in the process of reviewing 30,000 returns submitted electronically where one of the exclusions applied. This is expected to take about a week and work is expected to start on 19 November 2018.

Where returns were correctly submitted on paper, HMRC has processed these but it has taken a long time to do so. Initially HMRC did not create the correct payments on account for 2017/18, although we understand that HMRC has now corrected this.

Additional tax liabilities

Although a higher tax liability may result from the review, HMRC have confirmed that revised tax computations will not be sent to the taxpayer’s accountants, such as Whittingham Riddell LLP, but only to the taxpayer. Therefore, we will not be in position to check if the computations are correct unless they are forwarded to us.

If the computation issued by HMRC requires amendment, then this must be done by post on paper and not electronically.

Where there is an increased tax liability, the taxpayer has 28 days to make payment before late payment charges and interest are applied. It is not clear how quickly HMRC will issue any refunds arising from the amended returns.

If you are concerned that HMRC have not processed your return correctly, we would be happy to review their computation.

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