Fears of chaos over taxman’s ready-filled form

Some assessments will be pre-filled with HMRC data but experts estimate one in 10 cases will contain errors

Millions of taxpayers could face chaos over their annual returns as HMRC introduces forms that come already filled out. The system is designed to save taxpayers having to calculate how much they owe. But experts estimate that one in ten returns filled using HMRC data will contain errors.

MILLIONS of taxpayers face chaos over their annual returns, experts warn, as HMRC rolls out new forms which it will pre-fill using its own data.

The so-called “simple assessment” system is a departure from traditional self assessment tax returns, and is designed to save taxpayers the hassle of having to calculate how much tax they owe.

But experts estimate that one in 10 returns pre-filled using HMRC data will contain errors that could lead to people paying too much or too little tax.

In addition, those who find that the amount charged is too large or too small will have just 60 days to challenge and correct the amount.

Nimesh Shah, partner at accounting firm Blick Rothenberg, said: “The concept of simple assessments makes sense but the UK’S complex personal tax code makes the proposition largely unworkable. It is likely to lead to people paying the incorrect amount of tax.”

“Taxpayers are relying on HMRC’S data being correct. In my experience the information HMRC holds about taxpayers which would be used would be wrong in around one in 10 cases.”

Its simple assessment system is initially being tested on two small groups of taxpayers, but a spokesman for HMRC told The Daily Telegraph that the system has been designed with the intention of taking millions of taxpayers out of traditional self assessment.

He said: “Simple assessment tax statements are accurate. They provide taxpayers with a clear, up to date, reliable picture of their tax affairs based on the most up to date information from employers and pension providers.”

He added that higher rate taxpayers who contribute via PAYE but who have regular untaxed income from other sources could be switched to simple assessments “within a few years”.

It is also thought that 1.7million pensioners who are required to file a return could be lifted out of self assessment under the new system. At present, around 11million people must complete an annual tax return to provide HMRC with information about their income. However, HMRC is stepping up efforts to reduce this figure.

From next year new state pensioners with income more than the personal tax allowance in the tax year 2016 to 2017, and PAYE customers, who have underpaid tax and who cannot have that tax collected through their tax code, will use simple assessments and will receive letters in the coming days.

Taxpayers with complex tax affairs and self-employed people are unlikely to be moved on to simple assessments.