Have you received an unexpected letter from HMRC? – Irish News

QUESTION: I am an employee and have a small side hustle that I started in the 2022/23 tax year. I knew my employer collected my tax from my salary, but I prepared and submitted a tax return to the HMRC website to report my other income to HMRC and pay tax on it. I recently received a letter from HMRC stating that they intended to carry out an audit of my tax return. What does this mean and what powers does HMRC have?

ANSWER: An HMRC officer may, within nine months of receiving a self-assessment tax return or corporation tax return, amend it without initiating an investigation to correct an obvious error or omission or anything else the agent has reason to believe is incorrect. based on information already held and where no additional information is required.

“Obvious” means that there can be no doubt as to correct entry, this may include correcting arithmetic errors, transposing incorrect digits and errors of principle.

The taxpayer (whether an individual, partnership or corporation) has no right of appeal against a correction, but has the right to reject it by giving written notice within 30 days of the date it was issued by HMRC. This means that the correction has no effect and the self-assessment is reverted to the original figures.

Even if the taxpayer does not reject the correction within the deadline, they may be in time to amend their return. In such circumstances, an officer may only challenge the amendment through a formal investigation of the amended statement.

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An HMRC officer may investigate a return or an amendment to a return by giving written notice to the individual, sole trader, partnership or company concerned. Investigations into self-assessment returns or amendments are initiated within 12 months of submission of the return to HMRC.

If the declaration was submitted after the legal production date, the notice of investigation must be issued no later than January 31, April 30, July 31 or October 31 following the first anniversary of the day of submission. the declaration.

Your request does not specify whether you included the details of your salary in your tax return. Although the tax has already been collected by your employer, your other income could push you into a higher tax bracket. Your tax return must therefore include your total income as well as any tax incurred at source. This means that your additional tax payment will take into account your tax bracket as well as any personal allowance (i.e. the tax-free amount) already used.

Regarding the compliance check you recently received, since you prepared your own tax return, I suggest you speak to an accountant to get their opinion on the completeness of your initial submission.

They will be able to draft the necessary response to HMRC and help you request an extension if you are unable to meet the deadline set by HMRC.

• KellyAnne Murtagh ([email protected]) is a senior tax director at AAB Group Accountants Ltd (www.aabgroup.com). The advice in this column is specific to the facts surrounding the question asked. Neither Irish News nor the contributors accept any liability for any direct or indirect loss arising from reliance on the responses.