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HMRC internal manual

PAYE Manual

Reconcile individual: simple assessment: introduction

Introduction

Simple Assessment went live on the 11 September 2017 with the first letters reaching Customers by 18 September 2017. The legislation allows HMRC to legally enforce PAYE underpayments, which means the current process of issuing Voluntary Payment Letters (VPL’s) will change from the 2016/17 year. Customers will still continue to receive a VPL if they have a debt from an earlier year that cannot be collected through their tax code.

Reconciliation result

When reconciliation runs NPS will identify whether the customer is balanced, underpaid or overpaid.

If the customer is underpaid and we are unable to code out the underpayment they will receive a Simple Assessment (PA302). This replaces the current process of issuing VPL’s and transferring the customer to self assessment if payment is not received.

Payment due date

The Simple Assessment underpayment will have a specific due date. If the reconciliation is completed between April up to and including the October 24th the due date will be the 31 January of the following year. For example a 2016/17 reconciliation completed in September 17 will have a due date of 31 January 2018. If the reconciliation is completed after the 24 October the due date will be 3 months and 7 days from the reconciliation date. For example a reconciliation completed on the 30 October will have a due date of 6 February 2018.

Multi-year reconciliation

Simple Assessment is a stand-alone charge and must be dealt with in isolation. Therefore when a case goes into simple assessment amount cannot be carried forward. For any years prior to 2016/17 normal BAU will continue and underpayments will roll forward. For Simple Assessment years the debt will be remain allocated to the year in which it was created.

Tolerances

When the initial reconciliation is completed current tolerances will apply. However for any amendments which trigger a re-reconciliation completed on a Simple Assessment there will be no tolerance. For example if an underpayment increases by £0.49p an updated PA302 reflecting the new total will be issued to the customer. This is to ensure that we are always requesting the correct liability.

If a multi-year reconciliation is completed and the end result is an underpayment that cannot be collected through a customer’s tax code, NPS will separate the years. For years prior to 2016/17 a VPL will be issued. For a Simple Assessment year a PA302 will be issued. As the tolerance will have been applied at the beginning of the reconciliation process when NPS considered both years no further tolerance will be applied when the years are separated.

Simple assessment accounting

When an underpayment is identified as a Simple Assessment all accounting will be dealt with in ETMP. ETMP is the system used to deal with the financial transactions for Simple Assessment. It will be responsible for holding the charge due, creating the unique charge reference for the amount due from Simple Assessment, and allocating any payments made towards it. It will also be able to issue repayments, calculate interest, penalties, and issue reminders to the customer. The charge will be sent from NPS to ETMP and the amount will show as ‘sent to ETMP’. NPS Contact History will continue to show that a P800 has been issued, even when it was a PA302. Users will need to check NPS Accounting for ‘sent to ETMP’ which will only show when a PA302 has been issued.

When ETMP receives the underpayment amount from NPS, ETMP will allocate a charge reference and identify the due date for the payment. The charge reference and due date will then be sent back to NPS, this will be displayed on the PA302 and stored on the payment screen in NPS Financial Summary.

Charge reference

Simple Assessment is dealt with on a single year basis. Once a charge reference has been allocated this will remain the same even if a re-reconciliation is completed, they will use this reference when making any payments for that specific year. If the customer has a Simple Assessment in the next year they will receive a new charge reference for that underpayment. If a re-reconciliation is completed NPS will automatically update ETMP and an updated PA302 will be issued.

Payments

Customers can currently make a payment for their Simple Assessment via their Personal Tax Account (PTA) or by cheque.

Any payments made will be held in ETMP only and shall not be visible in NPS. Some users will need access to this system to view all accounting details for Simple Assessment charges. ETMP will show any payments received and allocated to the charge. If a re-reconciliation occurs which results in an overpayment situation, this will be dealt with through ETMP.

Example: If a Simple Assessment is issued and the customer pays the amount due and then it is subsequently amended to reduce the amount due, the overpayment of the amount paid will be dealt with through ETMP. If the amendment results in the customer not owing any tax and a repayment being due, then the Simple Assessment will be nullified and a P800 issued and the repayment of tax will be dealt with through NPS. The amount of the new reconciliation will be provided by NPS to ETMP and the amount due/overpayment will be updated on ETMP, and the customer can request the repayment.

Enquiries, queries and appeals

Enquiries

An enquiry is a when an informal question is raised and an explanation is provided about Simple Assessment, the process or how the calculation has been worked out. An enquiry will not result in a change to the Simple Assessment calculation

Queries and Appeals

As part of Simple Assessment customers can now query and appeal their charge. A customer can query the charge if they believe it may be based on inaccurate information, and there is a statutory challenge to the content of the calculation which the customer believes is incorrect.

The customer has 60 days from the issue of the PA302 to make a query. A query can be raised over the phone or in writing but must be responded to in writing by HMRC. If the customer does not agree with the outcome of a query they have a further 30 days to make an appeal which must be done in writing. The customer must complete the query process before moving to appeal.

A new screen has been added to NPS to manage queries and appeals. This is accessed through the payment details screen and is called the ‘Simple Assessment Charge’.

The screen will be used to record a query or an appeal as well as providing the option to suspend the charge. The appeal option can only be selected when a query has been closed. The suspend option will stop the amount due flowing to Debt Management for action but will let the customer make payments. This should only be used when the customer has specifically asked for the charge to be suspended for a query or appeal.

When the query/appeal flags are marked the customer’s record is inhibited and no re-reconciliation can take place for any year. Once the flag is removed an automatic re-reconciliation will take place and new PA302 will be issued referencing the query. When removed an automatic note is added to NPS. Any changes notified while the query and appeal flag are set will not be actioned until the flag is removed, a further PA302 will be issued giving the final position and a note added to NPS.

The query and suspend flag is set for 6 months and can be extended by a further 6 months if the query has not been completed. If no action is taken after this time the query and suspend flag is automatically removed and an updated PA302 is issued. When this happens an automatic contact history note is added to NPS.

Unlike the query flag, the appeal flag will not be automatically removed by NPS and will have to be removed by the user.

Any written enquiries and/or queries will be dealt with in DMS. Any Simple Assessment Appeals will go into the PSA SA Appeals and Penalties queue. There will be detailed guidance for dealing with these DMS items.

In cases where the query is a dispute against actual untaxed interest provided by a bank/building society, refer to PAYE130063 for more information.