EIM71425 - Assessments, appeals and other procedures: coding: contentious appeal cases

Where a coding objection or appeal involves a contentious matter such as an expenses deduction or employment status, it is preferable to seek to deal with the matter formally at the year-end rather than by means of a coding appeal. If a taxpayer persists in wanting to have the matter dealt with by way of a coding appeal, you should seek advice as necessary on procedures and the point at issue.

Even though the First-tier Tribunal’s decision on a notice of coding is final, a contentious point at issue, for example an expenses deduction, can be litigated again at the year-end. If necessary, any taxpayers who are not normally sent self assessment returns can be sent returns and asked to self assess for any year where they or HMRC want to pursue a point formally, see EIM71405 about self assessments.

Where however an objection or appeal to a notice of coding involves a claim to a relief such as a personal allowance, the question as to whether the relief is due can be considered formally in the tax year in accordance with Schedule 1A TMA 1970, with the decision on the coding objection or appeal following automatically on from the outcome of the decision on the claim to relief. The handling of such a claim to relief made during a tax year is covered in the PAYE Manual – see PAYE13040.

A claim to relief enquired into in a tax year and given effect to in a code number will have to be repeated in any self assessment made for that year in order to make the self assessment arithmetically correct. But the claim cannot be enquired into for a second time. So any enquiry into the self assessment cannot look at that part of the return.