When Can a Self-Assessment Notice Be Withdrawn?

A self-assessment notice to file is issued when HMRC requires an individual to complete a tax return. However, if the taxpayer no longer meets the self-assessment criteria, they can request its withdrawal.

This is particularly useful if the return is not required and would otherwise be submitted late, leading to avoidable penalties.

HMRC’s Power to Withdraw a Notice to File

Since 2014-15, HMRC has had the authority to withdraw a notice to file in certain circumstances. If HMRC cancels the requirement to submit a tax return, it may also remove any associated late-filing penalties.

This ensures that individuals who are incorrectly issued with a self-assessment return are not penalised unfairly.

However, taxpayers must check that they genuinely do not need to file before requesting withdrawal. If they do qualify for self-assessment, failing to file could lead to significant penalties.

How to Request the Withdrawal of a Self-Assessment Notice

To request withdrawal, taxpayers must:

• Confirm they no longer meet self-assessment criteria.
• Contact HMRC by phone or in writing to request the notice’s withdrawal.
• Await HMRC’s decision before assuming they are exempt from filing a return.

If HMRC agrees, the requirement is removed, and any penalties related to non-filing may be cancelled.

How We Can Help

At Lewis Brownlee, we assist clients in determining whether they need to file a tax return and handling withdrawal of self-assessment notices. Plus, we offer a free introductory meeting. We find this the best way of letting people meet us firsthand and find out how we can help. All before committing. That’s how confident we are that we can help. So, when you’re ready, we’re ready. Call us today and let’s see how we can partner in your tax success!

For professional tax advice, or any other accountancy-related concern contact us today.

HMRC appear to be trying to be helpful by working out from the information they hold whether taxpayers have underpaid or overpaid tax. But the system is horribly flawed because HMRC are short of human intervention to ensure there is ‘quality control’ on the output.

We have seen:-

• Informal assessment issued when someone has been issued with a notice to file a self-assessment return.
• An informal assessment issued even after a self-assessment tax return has been filed for the year because HMRC have failed to note that the person is in self-assessment already. In this case the client was getting the same refund twice!
• Using actual figures for savings income and dividend income from previous tax returns filed under self-assessment as estimates in the informal assessments without making it clear on the face of the calculation that these are estimates – the result – clients getting refunds that they are not entitled to, and other clients not being assessed to enough tax!

HMRC will have the power from 2016-17 to assess an individual’s income tax or capital gains tax liability without them first being required to complete a self-assessment return if HMRC hold enough information (from the individual or a third party) to make the assessment.

Taxpayers will have 60 days to query these, informally. If they are still dissatisfied they will have a further 30 days to appeal formally.

Currently with the informal assessments (P800) being issued for 2015-16 if the taxpayer will not pay any liability shown as due and HMRC have no other means of collection, say through a restriction to a notice of coding, then HMRC have to issue a self-assessment tax return to the individual.

Two changes, effective from 6 April 2016 will result in more estates having to settle tax liabilities arising during the period of administration. Prior to 6 April 2016 most estates would only have had to worry about settling income tax in a few cases.

Now that virtually all interest is received gross (from 6 April 2017 interest distributions from OEICs and unit trusts will also start paying gross) it will be necessary to account for the basis rate (20%) tax liability due on the interest unless the only source of income is savings interest and the tax liability is below £100.

The good news is that if the total tax payable is likely to be less than £10,000 the tax liability can be assessed and paid informally.

This includes the 7.5% on dividends (estates do not get a £5,000 exempt band) that estates will now have to pay as there is no notional tax credit with dividends.