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HMRC internal manual

Self Assessment Manual

Returns: individuals returns: computer calculation is incorrect: creating a return charge

There are rare occasions when the automatic calculation carried out by the computer will be incorrect. These cases should be identified during capture of the return by the operator. In all cases function CAPTURE RETURN must be aborted and the liability calculated manually.

The automatic calculation will be incorrect in the following circumstances

  • The standard calculations do not always give allowances and reliefs in the most beneficial way and Double Taxation relief is due
  • Relief is due under Section 699 ICTA 1988
  • The taxpayer claims post-employment deductions under Section 92 FA 1995
  • The taxpayer is claiming full foreign service exemption and tax has been deducted from lump sums
  • The taxpayer has transferred surplus allowances to the spouse or civil partner, the surplus is then reduced and the excess will not be recovered from the spouse or civil partner
  • Where the tax exceeds the income (for example, in lump sum income/pension payment cases and the taxpayer wants the payment to be taxed on an accruals basis)

If any of these circumstances apply to the taxpayer it is necessary to calculate the liability manually and enter the taxpayer’s liability using function CREATE RETURN CHARGE. Further action is then required as the computer will not automatically

  • Update the taxpayer’s return profile
  • Issue a Tax Calculation if applicable
  • Create work items
  • Make any repayment where claimed on the return
  • Note: If there is an amount pre-populated in the ‘Outstanding debt included in your tax code field’ within CREATE RETURN CHARGE, you should use the SEES calculator to calculate the figures required. If you are unable to use the SEES calculator, you must reduce any PAYE tax included in the tax deducted at source figure, by the amount of the debt coded, before entering in function CREATE RETURN CHARGE.

If you are processing a return after 31 December following the end of the return year and you need to repair an entry or entries, and that repair(s) increases the taxpayer’s liability (This content has been withheld because of exemptions in the Freedom of Information Act 2000) and no repayment is due, do not make any repairs to the return before using function CREATE RETURN CHARGE.

Further information is available on repairing a return after 31 December following the end of the return year, see subject ‘Repairing Returns After 31 December: Individuals’ (SAM121540).