I was due an annual review of my CMS payment calculations on the 12/05/23.
When I received my annual review, it was based on my 2021-2022 Tax Year. There was no explanation as to why this was. The review outcome just said ‘we go by the latest available full tax year’.
Prior to the Annual Review, I had completed a Self-Assessment Tax Return to HMRC with disclosure of earnings for the Tax Year 2022-2023. Total earnings for this year were less, so considerably reduced from the previous Tax Year for earnings.
With very little clarity I rang the CMS to query. I explained that in the Tax Year 2022-2023 my earnings had reduced substantially. The reduction in my earnings equates to more than 25%, however that is irrelevant according to the CMS
Within this phone call, the CMS representative was able to pull up the HMRC declared earnings for the Tax Year 2022-2023. They confirmed earnings at the correct price. This supported that the CMS do have access to HMRC figures. I was told verbally that as HMRC had not yet calculated my earnings for Tax Year 2022-2023 on their system, that I was required to submit evidence of these earnings by way of wage slips and self-assessment tax return.
On the 31/5/23 I provided my March 2023 Pay Slip, a copy of the full Self-Assessment Tax return, which declared expenses I have to pay for fuel and expenses associated to my employment
In less than 24 hours I got a rejection with reason ‘letter to follow’. When I was able to access the letter with a stated reason it stated: “Income reduction is not less than 25%”. This is irrelevant- my earnings have reduced at this annual review and HMRC manual records can be viewed by CMS to support this as they have done so on the occasions I’ve telephoned.
IF- CMS are stating that they will not use HMRC manual records held for my income calculation for Tax Year 2022-2023, then WHY was I asked to submit full evidence of my earnings ie wage slip and self-assessment tax return if it was to be dismissed. A considerable time and effort went into the submission letter- only to be told my review had been rejected. Only when I rang again was I afterwards told that the CMS can rely only on HMRC calculated earnings. I ask then why was I asked to submit this evidence and waste my time in the first place?
In the tax year 2021-2022 when my earnings went up, CMS accepted the manual figure from HMRC then, as I submitted a self-assessment tax return in exactly the same manner that year as every year. When my payments went up CMS accepted the HMRC manual figures then, but now I’m told CMS will not accept HMRC manual records, when my income has reduced and has gone done.
I spoke to HMRC who have clarified that the earnings I submitted and this is the correct figure for earnings in the 2022-23 tax year and this is the correct figure on the cms system now, so this supports what seems to be that the CMS the blatantly calculate as they see fit and last year accepted and relied on manual figures then.
I have now got to see if I can get an independent tribunal to look at this help please
Sorry I have no help to give, only to confirm similar and share the experience. For 2 years CMS has assessed me based on my HMRC records but also taking into account a letter sent on April 1(my assessment is end April) which explains some of my complicated issues based on share awards. The last 2 years the assessment has reflected the letter and circumstances within.
This year I sent the same letter on April 1 and received an assessment double the previous 2 years. Their explanation was that for the annual assessment they cannot take into account anything other than what HMRC records show. So my letter was not admissible. But it was for the previous 2 years!
The latest is that I have had to provide 2 pay slips(April May) to show my basic salary and they will reassess based on that and assuming 25% less, which it will be. So instead of being assessed for this year based on last years earnings(as it should be), they are re-assessing me based on 2 months only of this current years earnings. That does not seem correct to me, but the only way they say they can change it, as they cannot go retrospective, as too late.
I have whinged a few times on here that the inconsistency is the worst bit about CMS for me. And I am back to looking at my portal twice a day to see if they have revised, so I have some spare money for my life!
It sounds to me that in your case, if they say you are not 25% different to the first assessment then you will be stuck as you are, as they do not seem to have a mechanism to look at individual circumstances and adjust accordingly. Its very frustrating and you have my sympathy.
Hi,
So if your annual review is may, then a month earlier they check HMRC records, so they likely would not have found the 2022-2023 SA return.
If i remember there 25% rule, they apply that heavily to people with regular PAYE permanent jobs. With self employed, they like to sit and wait for the SA returns each year at review time.
I recommend you join this group for paying parents. Lot of experienced members, and many have taken tribunal route: