Assessments, appeals and other procedures: self assessments
Most assessments are self assessments, taking into account all employment income and any tax deducted through PAYE.
Requirement to self assess
HMRC can require any taxpayer to self assess. Directors and those employees who receive total income of £100,000 or more are automatically required to self assess even though the right amount of tax for the year has been deducted through PAYE. And other taxpayers whose income is wholly or mainly employment may be required to self assess, for example the small number of elderly people whose level of income may affect the amount of their personal allowances.
Bringing taxpayers into self assessment to deal with a contentious issue
Taxpayers who do not normally self assess will be brought into self assessment for any tax year where there is a contentious point, for example a deduction for expenses, where the matter will proceed to the First-tier Tribunal. Taxpayers present their view of the matter in the self assessment. Then, following an HMRC enquiry into the self assessment, if the matter is not resolved the point can go to the First-tier Tribunal and beyond by way of a taxpayer appeal against an HMRC amendment to the self assessment.
(This content has been withheld because of exemptions in the Freedom of Information Act 2000)
Section 711(2) ITEPA 2003 provides that a taxpayer subjected to PAYE who has not been asked to self assess by HMRC can ask to self assess up to 3 years after the 31st October next following the end of the year where PAYE was operated. The cut-off date is set so that a self assessment can be made within 4 years time limit for assessments set out in section 34(1) TMA 1970.