HMRC Clarifies Self Assessment Confusion Over Service Companies

by Robert Lee, Tax-News.com, London

09 September 2008

HM Revenue and Customs (HMRC) this week announced that it has revised its guidance relating to the service companies question which forms part of the 2007-08 Self Assessment tax return for individuals.

On Monday, HMRC acknowledged that "with hindsight the question on the tax return and original guidance were unclear, for which we apologise."

Since concerns were first raised, HMRC revealed, it has been working closely with representatives of the Institute of Chartered Accountants in England and Wales (ICAEW) and the Chartered Institute of Taxation (CIOT) to make the text of the question and the guidance clearer.

As a result of that collaboration, it announced that it has now developed:

• Clearer guidance in the tax return guide which should be read when completing the 2007-08 Self Assessment tax return and tax returns for future years; and
• Revised wording for the service company question, which will first appear on the 2008-09 Self Assessment tax return.

HMRC will shortly update the 2007-08 tax return guide (SA150) on the Self Assessment returns part of its website to reflect the new text, the tax authority revealed.

For those individuals who have already submitted their 2007-08 Self Assessment tax return, HMRC has announced that they do not need to take any action as a result of these changes, and there will be no adverse consequences of having completed or left blank the question in a return filed prior to this amendment.

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