New P87 form now live on government website
From 6 May 2022, people claiming for income tax relief on employment expenses must use the standard P87 form, which can now be found on the government’s website. The process will be fully automated, which means it’s important applicants follow the guidelines set out by HMRC.
HMRC is mandating the use of the new P87 form, and said it will reject claims that are made on substitute claim forms, although other options will remain available. These include claims made using one of the following options:
• via a self assessment tax return;
• via the online service available to taxpayers (but not agents);
• by printing, completing and posting the P87 form available on gov.uk;
• by phone (subject to limits) if a claim has been made for a previous tax year.
HMRC has made changes to the P87 form. It now has the functionality for multi-year claims and up to five employments. However, the robotics technology employed cannot process attachments, so any claims made including an attachment will be processed manually, meaning the claim will take a lot longer to complete.
Digitally excluded taxpayers will still be able to request a hard copy of the new P87 form.
The switch will cause some issues for agents, as the ICAEW points out. It said: “High volume repayment agents will be most impacted as they often use their own substitute forms. This change has the potential to significantly disrupt their business model, particularly those that use deeds of assignment rather than simply nominating the repayment to the agent.
“Simple nominations can be done on the P87. Deeds of assignment need to be on an attachment which means that these cases will need to be processed manually, which will cause a delay.
“Where a nomination is made, the taxpayer remains legally entitled to the repayment and can withdraw their nomination at any time. If a taxpayer legally assigns a repayment, the third party is legally entitled to the repayment. An assignment can only be revoked if both parties agree in writing.”
ICAEW said it welcomed the increased transparency that the changes should bring. It added: “Many taxpayers don’t understand that they are signing a deed of assignment when it is included on a substitute claim form. It also gives HMRC the opportunity to check deeds of assignment carefully to ensure that they are compliant. ICAEW is aware of concerns that HMRC has been accepting paperwork that may not meet the criteria for a valid assignment.
HMRC said: “We’re bringing in the new form so we can have a consistent standard of P87s coming into HMRC. Standardisation will also help us to start automating the processing of P87s.
“We currently receive a wide variety of forms from agents. To create a more efficient process and for automation to work, all forms need to be the same so our systems can scan them and identify the necessary information. This will help us to pick up and process any repayments and coding adjustments more quickly.”