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Our client inherited an offshore life insurance policy which was surrendered in the tax year ended 5 April 2017 for £48 000. His only other income was employment earnings of £33 500 gross which were taxed under PAYE.
We submitted the tax return in good time and in 2018 were informed that our client had underpaid by £100. This was shown in the computation from HMRC to be due to a difference in our top slicing relief claim.
We appealed and HMRC agreed that our computation was correct.
In January 2020 we received a further letter from HMRC stating that its earlier agreement was incorrect and our client does owe £100. The department’s error was apparently due to ‘ongoing issues with the self-assessment calculator following the introduction of the new nil savings rate’.
HMRC is citing its current interpretation of ITT0IA 2005 s...
