Amendments to tax returns

Amendments to tax

returns

Call for Evidence

Publication date: 7 November 2018

Closing date for comments: 6 February 2019

Contents

Introduction

Current position on tax returns

Potential policy approaches

Summary of Questions

The Call for Evidence Process: How to Respond

On request this document can be produced in Welsh and alternate

formats including large print, audio and Braille formats

1. Introduction

About this Call for Evidence

1.1 The government is keen to ensure that the process to amend a tax return is

simple and transparent for taxpayers to use.

1.2 The government recognises that tax records will increasingly be held and

submitted digitally. With the HM Revenue and Customs (HMRC) digital agenda

there is an opportunity to modernise the process and create a better taxpayer

experience.

1.3 There are a number of different methods of making amendments to returns,

which vary according to tax, value, accounting period and turnover. For

example, the processes for amending Income Tax Self-Assessment (ITSA),

Corporation Tax Self-Assessment (CTSA) and VAT returns differ and are not

consistent across the taxes or aligned with the digital future of tax

administration.

1.4 This Call for Evidence sets out the current way in which amendments to returns

are made and we are keen to gather evidence on the issues taxpayers face

when making an amendment. We also want to understand what the experience

is like for a taxpayer for each tax type, and understand whether alignment of

amendment methods across the taxes can work well. Further information to

assist HMRC in fully understanding the amendments process experience would

be welcome.

1.5 Following responses to this Call for Evidence we will seek to develop policy

solutions to any issues highlighted in the amendments to returns process.

1.6 Chapter two sets out what we mean by amendments to returns and the

differing existing processes across the tax system. Chapter three sets out the

policy work HMRC has already undertaken to review amendments and it also

explores the scope of the policy solutions given the future vision of tax

administration. We also ask a series of direct questions in the main chapters

and would welcome your responses to these.

1.7 We are keen to hear from taxpayers (both businesses and individuals), agents,

and representative bodies with views on amendments to returns, to help us

address any inadequacies and to ensure we introduce consistent administration

policies.

2. Current position on tax returns

HMRC’s policy on amending tax returns

2.1 An amendment is any change made by a taxpayer to a submitted return. It

forms an important part of HMRC’s tax administration framework and ensures

that both HMRC and its customers can exercise their right to correct, adjust or

amend a filed return. The process in making an amendment varies according to

tax type and in this chapter we will set out the existing processes for ITSA,

CTSA and VAT.

2.2 Where a taxpayer wants to make a change to a tax return, in some instances it

is possible to file an amended return. The period in which amendments to

returns can be made depends on the tax type.

2.3 HMRC can undertake a compliance check to check for errors in a tax return.

For example, under ITSA, HMRC can correct or amend any obvious errors or

mistakes made by the taxpayer by amending their tax return within 9 months of

the date the return was delivered. This is not the case for all tax types.

2.4 HMRC recognise that the current processes for making amendments are not

consistent across the taxes. For example, taxpayers can currently amend ITSA

returns online, manually, and make some amendments by phone. They are not

restricted to amending in the same format that the return was originally made

(e.g. a person filing online can still amend on paper or by phone). Whereas

depending on the circumstances, amendments to VAT returns may be made on

subsequent returns or may have to be notified separately on paper.

Amending ITSA returns

2.5 Taxpayer amendments to ITSA returns should usually be made within 12

months of the statutory filing date. The ability and period in which to amend a

tax return is therefore linked to the filing date for the particular return.

For example, if a taxpayer has filed a 2016-2017 return online (with a filing date

of 31 January 2018) they would be able to amend that return up to 12 months

after the filing date, so until 31 January 2019.

2.6 Where the taxpayer has informed HMRC of their chargeability on or before 5

October, following the end of year of assessment, but the tax return is not

issued until after 31 October, the taxpayer has three months from the date of

issue to file the tax return. The return can be amended up to 12 months after

the deadline for filing.

2.7 ITSA returns that have been filed online can be amended online or by paper.

The normal deadline for filing an ITSA tax return online is 31 January after the

end of the tax year. For example, an ITSA return for 2016-17 should generally

have been filed by 31 January 2018. Paper returns must be filed by 31 October

after the end of the tax year, so a deadline of 31 October 2017 for a 2016/17

paper return. Therefore, where the normal online filing deadline applies,

amended returns for 2016-17 must be made by 31 January 2019.

2.8 Where a paper return was filed, a mistake in the return can be amended by

downloading blank versions of the required pages and then sending those

revised pages to HMRC. Alternatively, taxpayers can write to HMRC with

details of the amendments.

2.9 Some amendments to ITSA tax returns can be accepted by phone, such as

where a taxpayer forgot to fill in an entry or wants to change an entry. HMRC

cannot accept whole return sections by phone – the taxpayer must complete

the missing pages online or by post.

2.10 Once the statutory window for making an amendment to the original return has

passed, neither HMRC nor the taxpayer can amend the return. In some

circumstances tax overpaid may be refunded up to four years after the end of

the year of assessment; but that does not affect the original return and self-

assessment which would be final and no longer subject to possible amendment

by HMRC or the taxpayer.

2.11 HMRC can undertake a compliance check to check for errors in an ITSA return.

A taxpayer may make amendments to their return during the course of a

compliance check which will be given effect to once the check is completed.

2.12 Further information on making an amendment to an ITSA return can be found

in Self Assessment tax returns guidance.

Amending CTSA returns

2.13 For CTSA returns, amendments should usually be made within 12 months of

the filing deadline. The deadline depends on the company year-end date. The

return can be amended online or by writing to the appropriate tax office

(regardless of how it was originally processed). The exceptions to this include

the Corporate Interest Restriction, which is a group filing, where amendments

can be made beyond the filing deadline.

2.14 Other than in very limited circumstances, HMRC has not prescribed the format

and content of an amended return or provided an official form for amending

returns. Generally, companies can amend CTSA returns informally in

correspondence or online.

2.15 HMRC can undertake a compliance check to check for errors in a CTSA return.

A company may make amendments to its return during the course of a

compliance check, these will be given effect to once the check is completed.

2.16 Further information on making an amendment to a CTSA return can be found in

CTSA guidance.

Amending VAT returns

2.17 Unlike an ITSA return or CTSA return, the VAT return cannot be refiled. If a

taxpayer discovers an error after filing a return, they may be able to make an

amendment on their next VAT return.

2.18 Errors on past returns can be adjusted on the next VAT return if:

 it is for an accounting period that ended less than four years ago;

 the error was not deliberate;

 the value of the error is £10,000 or less, or

 the value of the error is up to 1% of the total value of sales for the

accounting period (up to a maximum of £50,000).

2.19 VAT return errors that do not meet the conditions above must be notified on

form VAT 652 or by writing to HMRC with the details.

2.20 Further information on making an amendment to a VAT return can be found in

VAT Notice 700/45.

Questions

Question 1: Which taxes do you submit returns for? How do you make amendments

for each tax?

Question 2: What are your reasons for making amendments?

Question 3: Do you find it easy to make amendments to returns? Is the process

complicated? How long does it take?

Question 4: If you submit amendments for different taxes, are there any (or elements

of any) that are easier or more difficult than others?

Question 5: How long does it take to get a response from HMRC?

Question 6: What is your interaction like with HMRC when you make an amendment?

Question 7: Is there anything about the current amendments processes that cause

you difficulty?

3. Potential policy approaches

Further evidence to support our findings

3.1 HMRC held informal consultation meetings with external stakeholders in

February 2018 to discuss several tax administration topics, including

amendments to returns. Discussions touched on the issues taxpayers (and

their agents) face in making an amendment. In relation to amendments we

have been told the following:

 The different ways of making amendments cause confusion.

 Taxpayers want to have the same process regardless of when it is

invoked.

 Taxpayers want a process that is digitised end-to-end.

 Taxpayers want to be able to explain why they made an amendment up

front (including being able to attach supporting documents).

 Taxpayers want a receipt and acknowledgement of an amendment.

 HMRC should consider the process when agents are taking over clients

in the middle of an amendment. Taking over clients is apparently a

problematic time in any agent process.

What the future holds

3.2 Following the brief engagement to date on the subject of amendments, the

government is seeking to understand the experience faced by a taxpayer when

making an amendment to a tax return. The government wishes to consider

suggestions for a method of correction that works for all tax returns and makes

amendments more transparent and simple.

3.3 Although we have referred to ITSA, CTSA and VAT in this document, we are

also interested in your views on return amendment processes for other

taxes/duties administered by HMRC.

3.4 We want to create a consistent digital approach, whilst still accommodating the

digitally assisted and excluded, to make it simple for taxpayers to see their

returns and make amendments where necessary.

Questions

Question 8: What possible benefits might there be to a consistent amendments

process across taxes?

Question 9: Do you think having one consistent way to amend all returns will result in

savings for businesses? If so, please provide details e.g. simpler process, reduced

contact with HMRC etc.

Question 10: How would you prefer to make amendments to returns?

Question 11: How do you feel about a future single digital amendment process for all

taxes?

Question 12: Do you think being able to amend returns digitally will result in savings

for businesses? If so, please provide details e.g. simpler process, reduced contact

with HMRC etc.

Question 13: If you needed to make an amendment that covers multiple taxes (e.g.

correcting IT and VAT) how would you see that working in future? Would you prefer to

do each tax separately, or all in one?

4. Summary of Questions

Question 1: Which taxes do you submit returns for? How do you make amendments

for each tax?

Question 2: What are your reasons for making amendments?

Question 3: Do you find it easy to make amendments to returns? Is the process

complicated? How long does it take?

Question 4: If you submit amendments for different taxes, are there any (or elements

of any) that are easier or more difficult than others?

Question 5: How long does it take to get a response from HMRC?

Question 6: What is your interaction like with HMRC when you make an amendment?

Question 7: Is there anything about the current amendments processes that cause

you difficulty?

Question 8: What possible benefits might there be to a consistent amendments

process across taxes?

Question 9: Do you think having one consistent way to amend all returns will result in

savings for businesses? If so, please provide details e.g. simpler process, reduced

contact with HMRC etc.

Question 10: How would you prefer to make amendments to returns?

Question 11: How do you feel about a future single digital amendment process for all

taxes?

Question 12: Do you think being able to amend returns digitally will result in savings

for businesses? If so, please provide details e.g. simpler process, reduced contact

with HMRC etc.

Question 13: If you needed to make an amendment that covers multiple taxes (e.g.

correcting IT and VAT) how would you see that working in future? Would you prefer to

do each tax separately, or all in one?

5. Responding to this Call for Evidence

How to respond

A summary of the questions in this Call for Evidence is included at chapter 4.

Responses should be sent by 6 February 2019, by email to:

[email protected]

Or by post to:

HMRC

S1715

Harmonisation & Convergence/PDE

Floor 6 Central Mail Unit

Newcastle upon Tyne

NE98 1ZZ

Please do not send responses to the Consultation Coordinator.

Paper copies of this document or copies in Welsh and alternative formats (large print,

audio and Braille) may be obtained free of charge from the above address. This

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When responding please say if you are a business, individual or representative body.

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