27th
Jul 2022
HMRC has changed its mind over introducing a new deadline for first time landlords being given notice of their liability of ITSA – Income Tax Self-Assessment.
Currently self-employed people or first time landlords have to give notice to the HMRC of their liability for ITSA no later than six months after the end of their end of their relevant tax year.
Upon receiving the information HMRC has the time to issue a Unique Taxpayer Reference if the person does not already have one, giving them sufficient time to submit their full taxable income details by the statutory deadline of the following 31st January.
Recently HMRC was proposing to reduce the current six month deadline down to two, three or four months, as well as using a company’s start-up date to send a notification liability.
However a few days ago, Wednesday 20th July, HMRC announced a U-Turn on its proposals and will stick to the deadline of six months.
The Chartered Institute of Taxation applauds the HMRC’s U-Turn when saying the intended changes offered little or no benefit to landlords and would just cause even more problems.
The Institute now wants HMRC to explore avenues to help make ITSA processes quicker and easier.
John Cullinane, director of public policy at the institute, says: “We are pleased that the government agrees there is currently no need for HMRC to inflict what would represent significant upheaval on the newly self-employed and first time landlords with changes to when they have to register to pay income tax.??
“We believe the current Income Tax Self-Assessment registration process works well for most taxpayers, and there is insufficient evidence to change the current statutory deadline.”??
Cullinane adds: “It is right that HMRC should focus on improving its public education work and their own online guidance. As a starting point, HMRC may wish to undertake research amongst those businesses who have recently registered for ITSA, to identify what triggered their registration. That will provide a useful evidence base on which to develop a communications strategy.
“Even where awareness exists, there can be difficulties in navigating HMRC’s systems, such as creating a Government Gateway account or obtaining a Unique Taxpayer Reference, and in the meantime a taxpayer cannot file returns or pay the tax they owe. This is where we believe HMRC need to focus their attention and resources so that the registration process can work successfully and quickly for every taxpayer."
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