HMRC refuses to give pay details to tax agents from 1st May 2017
From the 1st May 2017 HMRC will change its current process of being able to confirm individual pay and tax details to tax agents, who ask for this information over the phone.
So, why are they doing this and what’s the process moving forwards? Well, HMRC says that the change to the existing process is to reduce the call handling costs and timing and to address security for taxpayers. Currently, HMRC receives 2.7 million telephone requests for taxpayer pay and tax details each year, and these are not just for employed taxpayers who are within self assessment. A great number of the calls are from high volume repayment agents.
The security concerns have been raised due to callers impersonating the taxpayer. In addition, there are instances where the taxpayer has not been aware that they have signed an authorisation form 64-8 and/or a deed of assignment for tax repayments.
When the taxpayer contacts HMRC directly, they will be given the requested details over the phone, or they will be directed to access their personal digital tax account.
Under the new process – even where the agent IS authorised to act, that agent will not be able to deal with HMRC directly on the taxpayer’s behalf.
From the 1st May, there will be a brief recorded message when using the Agent Dedicated Line to explain the new procedure. HMRC will also write to tax agents notifying them of the change, and will announce the new process in the next edition of Agent Update.
Digital Solutions To Help Agents
So, in response to “HMRC refuses to give pay details to tax agents”, from late summer 2017 HMRC expects to have a digital solution in place to allow authorised tax agents to access pay and tax details for clients, without making a phone call. It’s not clear if this solution will be available to all tax agents, or if the agent will first have to pass a new security clearance to access the data.
HMRC has said that all new data access solutions will only be provided as APIs.
So What Does This Mean For Our Clients?
Basically this means that more correspondence will be coming directly to our clients, which will then need to be forwarded to us as we will not receive copies from HMRC. Furthermore, a greater responsibility will fall to our clients, as we will need to receive the correspondence from HMRC in a timely manner. Hopefully we will also be able to access the new Digital Solution mentioned above but the timescale for this is still yet to be delivered.
This new process begs the question as whether the proposed changes breaks the spirit of Your Charter (the taxpayers’ charter), which says at point 1.5:
“We’ll respect your wish to have someone else deal with us on your behalf, such as an accountant or a relative. To protect your privacy, we’ll only deal with them if they have been authorised to represent you, and we’ll deal with them courteously and professionally.”
Are you aware of how National Insurance contributions are calculated and collected – if you have more than one job or self-employment role?
Did you know that National Insurance contributions are collected separately for each employment and self-employment, but are subject to an annual cap. You may have exceeded the annual cap on National Insurance contributions and been completely unaware.
So, how would this have happened and what action should you take if you have overpaid?
Firstly, let’s put this into context and add some flesh to the bones…
Here’s an example of National Insurance Contributions Calculated:
Gemma had two forms of employment for 2016/2017. She earns £50,000 in one job and £30,000 in the other. She pays primary Class 1 contributions of £4,332.80 in respect of the job paying £50,000 per year (£43,000 – £8,060 @ 12%) + (£50,000 – £43,000 @ 2%). Gemma also pays contributions of £2,632.80 (£30,000 – £8,060 @ 12%) in respect of the job paying £30,000 per year.
Her total Class 1 liability in respect of both jobs is £6,965.60 (£4,332.80 + £2,632.80).
However, if Gemma had one job paying £80,000, she would pay Class 1 contributions of £4,932.80 (£43,000 – £8,060 @ 12%) plus (£80,000 – £43,000 @ 2%). This is £2,032.80 less than the combined contributions from the two jobs withe the same total earnings of £80,000. This is because spreading the earnings over more than one job results in more contributions being paid at the main rate of 12%.
While Directors have an annual earnings period, they may still pay contributions in excess of the annual maximum if they have more than one job.
If you have more than one employment and your total earnings exceed the upper earnings limit of £43,000 (per year 2016/2017), we can review your contributions for the next year in case you have already or will in future exceed the annual maximum.
So, thinking ahead…
If we know tbefore the start of the tax year that you have or will have more than one employment where the contributions payable will exceed the annual maximum, it is possible to apply for a deferment. This removes the need to pay contributions initially and then claim a refund after the end of the tax year.
The extent to which it is possible to apply for a deferment depends on the number of employments and the level of earnings achieved. If the earnings from job are at least to the upper earnings limit (set at £866 per week, £3,750 per month or £45,000 per year for 2017/2018), deferment is permitted in respect of any other jobs.
However, deferment is still possible if none of the jobs has earnings in excess of the upper earnings limit, but the earnings criteria is met.
Here’s an example for you:
Adam has three jobs in 2017 earning, respectively, £800 per week, £300 per week and £150 per week. The earning criteria is met in respect of the first 2 jobs, for which weekly earnings of £1,100 per week are more than the earning criteria of £1,023 per week. Deferment will then be permitted in respect of the third job in this case.