Product and Process Groups
PAYE, SA & NICs Directorate
Royal House
2-6 Homer Road
Princes Gate
Solihull
West Midlands B91 3WG
Mr J Oakley
mailto:request-15611-
Tel
0121 712 8605
[email address]
Fax
0121 712 8698
Email [email address]
www.hmrc.gov.uk
Date
4 September 2009
Our ref
FOI 1926/09
Your ref
Dear Mr Oakley
Further to my letter of 25 August, I am responding to the requests that you made in your e-
mail of 30 July.
You asked for the reasons behind the rule that states that a taxpayer wanting to offset
expenses against tax for expenses or professional subscriptions of £2,500 or more has to
complete a personal tax return (self-assessment return).
The figure of £2,500 was increased from £500 with effect from April 2004 as one of a series
of initiatives in response to recommendations made by the Treasury Select Committee in
connection with the self-assessment system for individuals. The Committee recommended
that the then Inland Revenue take steps to reduce the number of individuals required to
complete personal tax returns with particular emphasis on pensioners and the lower paid.
I have been unable to find any document that records why the figure of £2,500 was chosen.
However, the size of the increase from the previous limit would have significantly reduced
the number of individuals required to make a claim for expenses by completing a tax return.
HMRC captures and processes the information on tax returns and tax becomes due or
repayable in accordance with the return information and the taxpayer’s self-assessment.
HMRC then conducts a risk assessment as part of the process of checking the return. The
risk assessment may identify obvious errors which can be corrected or other matters that
may require more detailed explanation and for which a formal enquiry will be necessary.
Information about expenses will be considered with the other return information as part of
that risk assessment.
You also asked how a taxpayer affected by the £2,500 limit for expenses is expected to
know that they need to complete a tax return, what they need to do and by what time. The
changes made in response to the recommendations of the Treasury Select Committee
Information is available in large print, audio tape and Braille formats.
Type Talk service prefix number – 18001
Director: Sarah Walker
included the publication of the criteria that HMRC uses for deciding whether a tax return is
needed. These can now be found under “Do you need to complete a tax return?” at
http://www.hmrc.gov.uk/sa/need-tax-return.htm. A taxpayer who has incurred expenses that
they wish to set against tax will need to contact HMRC. If those expenses are £2,500 or
more, the HMRC officer should explain what is required. A PAYE taxpayer who needs to
complete a tax return has five years from the 31 October following the end of the tax year to
require HMRC to give him or her notice to make a return.
Finally, I explained in my previous letter about the steps that you can take if you wish to
pursue a complaint about the conduct of staff at Dorchester Enquiry Office.
Yours sincerely
Martin Delnon
Self-assessment policy adviser
2
Document Outline
