Simple Assessments aren't so simple
It’s a little over two months ago that the 11million people in the UK who self-assess were extended a helping hand from HMRC in the shape of the ‘Simple’ Assessment.’ But unfortunately, it doesn’t quite live up to its name, writes Amanda Swales, director of GoSimple Software.
In short, freelancers must look beyond the supposed ‘simplicity’ of this change, and make sure HMRC are operating on good information. And keep your head above water, because Simple Assessment needs a critical evaluation before we submit to it.
What are Simple Assessments?
The logic behind the initiative does (to an extent) seem like a welcome change. Simple Assessments take the guise of an official letter and outline what freelancers should be paying for the year’s tax.
HMRC uses existing data to predict what’s owed. In essence, you’re being judged on previous returns for an image of what your current calculations should be. They will eventually be sent to every self-employed person in the country.
How can Simple Assessments sting?
There’s a caveat, however. The government expects you to pore over all the relevant financial evidence, just as before, to check that the figures match up. Any objections have to be logged within 60 days of receipt of the Simple Assessment notification. Failure to do so means you’ll have to submit to their prediction, or face difficulty if you actually owe more or less than they claim.
Additionally, Simple Assessments may not portray the real state of your income, if you’re dealing with multiple revenue streams. Factors such as varying personal allowances, deductions, gift aids and second jobs can muddy the tax waters; the challenge is to ensure HMRC has it spot on, whatever your financial situation as a contractor may be.
Why rely solely on Simple Assessments?
As a result, software able to cross over your income records and automatically generate a full, accurate tax report is really coming into its own.
more so in the future. Because Simple Assessments will soon spread to
who has to pay their own taxes. Having online tax tools that can support -- and
question HMRC’s predictive methods (perish the thought), has never made more