The Phantom Menace

It seems that there are "phantoms" within the machine, or rather that HMRC are issuing P800T forms showing overpayments of tax after taxpayers have already claimed and received repayments.

AccountingWEB have received a number of reports of "phantom P800T" forms being issued.

HMRC said that it had isolated the issue behind the mis-issued refund notices and was working to resolve it:

“Most customers’ tax affairs are automatically and correctly worked out by our systems. A minority of customers who are in both SA and PAYE get their affairs worked out by both systems, incorrectly, and we regret the inconvenience this causes them and their agents.” 

According to Tax faculty member Shirley Martin, the issue goes back to 2010:

“One of the processes is where NPS should be notified automatically when an SA record is set up/closed down (SAM100090). The process is supposed to set the SA indicator on the NPS record. The purpose of the indicator is to tell NPS that a P800T is not required because the tax will be settled  through SA (PAYE 93032).

The first cases of SA taxpayers getting refunds from NPS were attributed to a reported broken link between SA and NPS.”

HMRC has been aware of the problem for more than two years. Indeed it was reported by a loyal reader on this site in 2011:

"OK what we are experiencing is HMRC issuing unsolicitored P800T tax calculations for 10-11 when a 10-11 SATR has already been lodged! Clients are getting two repayments and some getting refunds when they owe tax "computer says PAYE and SA records not linked". FFS!"

However, the issue has yet to be fixed.

Tax does have to be taxing.

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Coding Cock Ups

The ICAEW reports that HMRC have made a wee bit of a cock up (again) with the codings for people who started receiving the state pension in 2010/11.

It seems that the new pension has not been included in their tax codes.

The normal procedure is for the DWP to tell HMRC when it starts to pay a state pension, so that HMRC can put it in the pensioner's tax code.

Where this has not been done properly for 2010/11, the state pension will not have been taxed and those affected will have underpaid tax.

Those affected should be informed by HMRC via a P800.

HMRC has said that the A19 concession is not applicable this time, because the underpayments are for current tax. However, do bear in mind that they tried to claim that A19 was not applicable for earlier tax underpayments when in fact it was.

Underpayments of less that £2K will be coded out in future years' PAYE codes. HMRC should contact those with underpayments of more than £2K, and give them 3 years to have the underpayment "coded out".

However, just in case there is a cock up wrt communications here are two helplines for contacting HMRC:

- Taxpayers 0845 300 0627
- Agents 0845 366 7855

As to why this cock up has happened again is not clear. Maybe the communications between DWP and HMRC are not as watertight as they used to be?

Tax does have to be taxing.

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Check The Numbers

The Low Incomes Tax Reform Group (LITRG) has estimated that approximately 1.4 million people will receive a P800 document from HMRC (advising people that they have underpaid their tax for 2008-09 and 2009-10) before Christmas.

However, John Andrews (the Chairman of LITRG), very wisely points out that just because HMRC has issued an underpayment calculation "doesn't mean to say the figures it shows are right".

In other words, as with all tax communications, please make sure that you check that the numbers are correct.

Tax does have to be taxing.

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What is TAXWISE?

TAXWISE is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Taxwise

Tax Investigation for Dummies, by Nick Morgan, provides a good and easy to read guide for anyone caught up in an HMRC tax investigation. A must read for any Self Assessment taxpayer.

Click the link to read about: Tax Investigation for Dummies

HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"