Now that 2017/18 tax returns are starting to be filed, the ICAEW have reported problems between in-year adjustments and self-assessment making the process look less than dynamic.

Dynamic coding and in year adjustments were introduced in July 2017 as HMRC started using RTI data from employers to recalculate employee tax codes in real-time

Two issues have been highlighted by the ICAEW:

Incorrect figures being identified by SA for underpayments being collected through a tax code

  • HMRC has confirmed that the SA system has not been differentiating between in-year (dynamic) underpayment adjustments in 2018/19 tax codes and those made under SA for 2017/18.
    • As a result the figure automatically entered into the taxpayers online account was the total adjustment for both years. HMRC was then incorrectly amending 2017/18  returns which had been filed correctly.
  • HMRC has advised that this issue has been fixed however the ICAEW is still receiving reports of cases where the fix appears not to have worked.

Unexpected collection of the SA liability through a tax code

  • Many agents and taxpayers prefer not to have SA liabilities collected through tax codes and tick the relevant boxes to prevent this occurring however dynamic coding means it is not always possible to prevent the collection of SA liabilities through tax codes.
  • The ICAEW are taking this up with HMRC.

This news follows straight on from recent issues reported with P800 and PA302 assessments



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