Self Assessment Deadline Day

Aside from today being the Lunar New year (the beginning of the year of the horse), it is also the deadline for the online submission of tax self assessments for tax year ending 2103. Failure to meet the deadline will result in an automatic fine of £100, irrespective of whether there is any tax owing or not.

Suffice to say, human nature being what it is, a number of people have yet to submit their tax returns; in fact, according to media estimates, some two million people have yet to file their returns.

This tardiness has prompted the ACCA to call for HMRC to put the deadline back to 3 February.

Aside from human nature being a primary factor in this tardiness, another contributing factor is likely to be the change in child benefit rules which has created a large number of first time self assessment taxpayers.

ACCA's head of taxation Chas Roy-Chowdhury claimed that HMRC had a "common sense" decision to make. He is quoted by AccountancyAge:

"Either it can stick to the deadline and penalise all those families and self-employed people who are struggling to get to grips with the self-assessment process.

Or it can do the right thing and give them a lifeline by extending the deadline. Self-assessment is not easy and there are fines starting at £100 for missing the deadline even if you don't owe any tax.

The circumstances around this year's deadline are different in that there will be a high number of people who will never have done self-assessment in their lives. They are going to miss the deadline not because they have been putting it off, but because they are newcomers. If reports are to be believed that two million have yet to meet the deadline just two days before it closes, then it is likely a lot of people will miss it."

As to whether HMRC will heed ACCA's call for a relaxation depends on how today turns out, and what form of media/political pressure ensues if vast swathes of middle class child benefit receivers are hit with fines for tardiness.

Quite honestly I don't see an extension to 3 February as making much of a difference; the chances are that those first timers who have not yet filed may be blissfully unaware that they have to file, and will only realise that when they are fined.

The more likely outcome will be that certain late filers will, if they have a reasonable excuse (eg first time ignorance), have their fines waived.

I should note that there is in fact a partial extension of the deadline to 15 February, but only for certain self assessment taxpayers.


As per Tolley the deadline extension applies to taxpayers who did the following between midnight on 21 January and midnight on 31 January 2014:
- enrolled for the Self Assessment online service, or
- requested a replacement user ID or password

As ever, views and comments are welcome.

Happy Lunar New Year!


Tax does have to be taxing.

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Communications Foul Up

The Telegraph reports that there has been a communications foul by by HMRC wrt the tax treatment of child benefit charges for this tax year.

HMRC tax coding notices HMRC implies that the full year's worth of benefit (for this tax year) should be collected through the wages in the remaining two months of this tax year.

Employers and taxpayers are both receiving the coding changes which could lead to the full year's money being taken through just two payslips. The information given by HMRC's customer helpline also confirmed the impression of the money being taken in two months.

However, the reality is meant to be different from what has been communicated. Yesterday HMRC apologised for the poor wording of its coding notices, it now insists the intention was not to claw back all the money in such a short time.

An HMRC spokesman said:

"We will not be collecting the full child benefit charge for 2013-14 tax year before 31 January 2015 at the earliest. We apologise if the coding notice suggests otherwise and anyone who finds they are having the child benefit charge taken in a way they did not want should contact us as soon as possible."

This of course means that people should check very carefully their PAYE coding notices and their monthly income net of tax for February and March.

Those receiving PAYE Coding Notices are urged to call the tax office on 0300 200 3300.

Tax does have to be taxing.

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Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

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What is Solar Tax Investigation Insurance?

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The Steady Ship II

Yesterday's article about the piss poor response rate to HMRC's 2013 Autumn staff survey prompted one loyal reader to post the following comment:

"Ken,

You and your readers may find the attached link interesting...

http://guernseypress.com/business/2013/09/26/hmrc-borrows-mind-strategey/
Read it twice, carefully, as ever, the devil is in the detail, WTF were HMRC doing before they sent someone to Guernsey (Tax Avoidance Haven?} and why was it necessary to send someone there when their own staff, unions and staff surveys ad nausea been telling them the same things.

Homer has been "reassuring" anyone daft enough to listen to her that the HMRC systems were resilient, complied with legislation and the best interests of staff were being served.

That's treble bollo@&s and they know it. There are some interesting facts emerging from the Dundee Employment Tribunals that will cause some intake of breath when they are connected to figures like the 17,000 Welsh HMRC staff days lost to stress in the last 3 years or the 1,300 plus tribunal cases brought to tribunal by staff in the last six years.

Come on Ken, get your readers to play "join the dot"s, its even more productive than "managers bullshit bingo"!"

The loyal reader is of course quite right, why send someone to a tax haven to discuss things that were already known?

Additionally, is it not "ironic" (I am understating myself here) that the staff survey results showed an "improvement" (albeit based on a piss poor response rate) given that HMRC has the worst sickness record in the public sector in 2013?

Seemingly at least 25% of total absences were related to mental health issues, and there were staff who never took a day off sick even though they were generally under-performing. Indeed HMRC even admitted to the fact that it had no mental health strategy!

Something is clearly not right within HMRC, and yet the survey results do not show that!

Why?

Tax does have to be taxing.

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Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

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What is Solar Tax Investigation Insurance?

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To find out more, please use this link Solar Tax Investigation Insurance



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A Steady Ship?

The recently published results of HMRC's 2013 Autumn staff survey have prompted AccountancyAge to declare that the "HMRC ship is steadying".

Almost every area yielded improved results, and an overall improvement on 2012.

In each metric on leadership and managing change, the proportion giving positive responses rose significantly; although they remain down on the rest of the civil service.


Well then, has the ship steadied does this show that things are getting better?

Bunkum and balderdash!

In the 2012 the response rate was 60%, the 2013 survey had a pathetic response rate of 43% (ie 57% of HMRC staff did not bother filling in the survey, indeed PCS told people not to fill it in because members do not trust what HMRC will use the data for).

That is hardly indicative of a happy and contented workforce.

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

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To find out more, please use this link Solar Tax Investigation Insurance



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Is HMRC Becoming More Aggressive?

AccountancyAge poses the hypothesis that HMRC is becoming more aggressive in its approach to collecting taxes. The hypothesis is based on two sets of statistics:

1 The increase tax take of £19.5BN when comparing 2013 to 2012.

2 An increase in judicial review requests from 39 in 2011 to 51 in 2012 (the most recent data available).

The above two sets of statistics are not, in my opinion, prima facie evidence of a more aggressive approach by HMRC; eg part of the increase in tax take can be explained by an increase in employment etc.

However, Jason Collins head of tax at Pinsent Masons is of the view that the increase in applications for judicial reviews is significant:

"This significant jump in the number of applications shows just how contentious some of HMRC's decisions have become.

Although not all of these disputes will progress all the way to a full judicial review hearing, this surge in challenges reflects taxpayers' reaction to the increasingly aggressive stance taken by HMRC to increase its tax take and clamp down on tax avoidance and evasion.

Any proposals which limit scrutiny over how HMRC goes about its business could ultimately have a negative effect on the quality of the tax authority's work."

I would suggest that the indicators of a more aggressive approach are more subtle; eg the ongoing attempts to water down/eliminate ESC A19 relief and the mandatory £100 fine for late filing even when there is no tax owing.

What are your views?

Tax does have to be taxing.

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Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

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What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance 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 Solar Tax Investigation Insurance



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Enquiry Centres Decision

My thanks to a loyal reader who has advised me that the decision on the fate of HMRC's enquiry centres will be released on Wednesday 12 February at 1pm.

The "decision making" process has been long and drawn out (almost 11 months to the day since it was announced), indeed on 10th January PCS stated that the decision would be made on 14th January.

Maybe the decision has indeed been made, but the publication of the decision is being delayed? 

Views and comments are welcome.

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance 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 Solar Tax Investigation Insurance



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Reviews and Appeals Feedback

Yesterday's article about Reviews and Appeals prompted a loyal reader to write to me pointing out that a substantial part of the work involves reviews of late filing penalties, work which is carried out in Londonderry (the future of which after 2015 appears uncertain).

I have been asked if I would publish the feedback by the reader, but on an anonymous basis.

Here is the full text:

"A substantial part of this work involves reviews of SA late filing penalties and employer PAYE penalties and preparing the HMRC case for cases which are considered by the Appeals Tribunal Judges.

The office which carries out reviews of SA and Employer PAYE penalties is Londonderry.

HMRC say they do not see a future for the site after 2015.

But this is ongoing work, every year's SA and Employer filing deadline creates more review requests.

So, if Londonderry staff are let go on voluntary release terms, including costs of redundancy compensation, the work will definitely have to be placed at another location, involving:-

- further costs of retraining staff at that new location

- disruption to customer service during the transition period until new staff are fully competent.

As well as approx 70 Personal Tax staff in Londonderry, who deal with Appeal reviews and are being invited to apply for redundancy, Londonderry also houses a specialised VAT Overseas Repayment Unit of about 80 staff.

So unless HMRC decides to also release the VAT staff by 2015, by again moving ongoing work from Londonderry to another office, the Londonderry office will continue to exist with ongoing accommodation costs at current levels, but with only half occupation.

I see the PCS website has a report on staff stress levels in Wales. I reckon it's not just in Wales."

Comments and views are welcome.

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance 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 Solar Tax Investigation Insurance



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Reviews and Appeals 2013

In December 2013 HMRC published a paper entitled HMRC’s Reviews and Appeals 2012/13.

The paper contains information and analysis about appeals against HMRC’s tax decisions for the period 1 April 2012 to 31 March 2013, including internal reviews and cases taken to the tribunal.

As per the paper:

"Where a customer disagrees with a decis ion made by HM Revenue & Customs (HMRC), they can ask for a review, make an appeal to an independent tribunal, or take both actions. Every year HMRC makes millions of decisions. Customers ask for reviews and make appeals in relation to only a small proportion of decisions."

HMRC noted:

"Taxpayers asked HMRC for reviews of 38,975 decisions in 2012-13 and HMRC completed 39,156 reviews, which includes the clearance of some cases from previous years. The number of review requests has fallen from 55,764 in 2011-12.

The decrease in reviews requested was mainly caused by fewer customers asking for reviews of VAT Default Surcharges and late filing and late payment penalties for Income Tax Self-Assessment (ITSA) and Pay as You Earn (PAYE). The number of reviews for VAT default surcharges decreased from 30,345 in 2011-12 to 20,046 in 2012-13.

There were fewer VAT default surcharges being issued in 2012-13 as compliance improves. When the first late filing and late payment penalties were issued in 2011-12 the number of requests for review of such penalties increased. The number went down in 2012-13, as customers become more familiar with the new system."

Out of the 39,156 reviews completed 54% were upheld, and 6% varied.

Taxpayers made 7,560 appeals to the tribunal in 2012-13. 4,564 cases were closed, either by a formal hearing by the tribunal, or by settlement before the hearing. 17% were decided in the taxpayers' favour.

Tax does have to be taxing.

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Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

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However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance 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 Solar Tax Investigation Insurance



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The £53K Belly Dance

The Telegraph recently reported an interesting tax tribunal case, involving the interpretation of belly dancing as to whether it is a sport or not.

Audrey Cheruvier, director of the Fleur Estelle Belly Dance School, argued that her courses were educational because belly dancing was taught as a sport.

Had her argument been upheld, she would not be liable for VAT .

However, the tribunal ruled that it was recreational rather than educational; and as such she was liable for £53K in tax dating back to June 2009.

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance 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 Solar Tax Investigation Insurance



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"

Online Filing Deadline Looming

Those of you who have yet to file your self assessment tax returns for 2013 have until the end of January to do so online, lest you be fined for tardiness.

The fine is an automatic £100, irrespective of whether you owe any tax or not!

Human nature being what it is, it seems that many people leave this task to the very last minute. HMRC have in fact identified that it is Londoners who are the most prone to leave this to the last minute.

Seemingly 11% of the 560,000 people in Inner London, who should have filed a return last year, missed the deadline. Other regions were, seemingly, less tardy.

Here is the text of the HMRC press release:

"Londoners are more likely to miss the tax return deadline than taxpayers in any other part of the UK, figures released today by HM Revenue and Customs (HMRC) reveal.

Around one in nine (11 per cent) of the 560,000 people in Inner London who had to send in a tax return last year didn’t do so by the relevant deadline – 31 October for paper returns and 31 January for online submissions.

The one million taxpayers in Outer London were more punctual, with one in 11 (9 per cent) failing to meet the deadline, but they were still the second worst offenders. The tardiest taxpayers outside of London were in the North West of England, with 8 per cent of their 890,000 returns failing to meet the deadline.

Taxpayers in the rest of the English regions fared better. The most punctual were in the South West, with only 6 per cent of their one million tax returns arriving late. The other English regions, as well as Wales, Scotland and Northern Ireland, all registered 7 per cent of late tax returns, which was the UK national average.

HMRC Director General of Personal Tax, Ruth Owen, said:
“Whether you’re from London, Livingston, Lisburn or Llandudno, the consequences of missing the tax return deadline are the same – an automatic £100 late-filing penalty.

“The longer you delay, the more you have to pay. So if you still have to send us your tax return, take action now.”

Anyone with an outstanding 2012-13 tax return must send it online, and pay any tax they owe, by 31 January.

Visit HMRC’s website at http://www.hmrc.gov.uk/ to register for Self Assessment and file your online tax return for free. Using a search engine to find HMRC’s online filing service can produce results which include third party websites that charge to file on your behalf. Therefore, if you want to file for free, type the HMRC website address directly into your internet browser’s web address bar.

For general help and advice on completing a return, visit www.hmrc.gov.uk/sa or call the Self Assessment helpline on 0300 200 3310 (open 8.00am to 8.00pm, Monday to Friday, and from 8.00am to 4.00pm on Saturdays).

Notes for editors
1.  Around 10.9 million people are expected send a tax return for the 2012-13 tax year.
2.  The UK Self Assessment filing populations on which the figures are based are as follows: Inner London – 560,000; Outer London – 990,000; North West – 890,000; East Midlands – 640,000; West Midlands – 750,000; East of England – 1,040,000; South East – 1,710,000; South West – 1,000,000; Yorkshire & The Humber – 680,000; North East – 270,000; Northern Ireland – 240,000; Scotland – 660,000; and Wales – 400,000.
3.  The penalties for late Self Assessment returns are:

• an initial £100 fixed penalty, which applies even if there is no tax to pay, or if the tax due is paid on time;

• after 3 months, additional daily penalties of £10 per day, up to a maximum of £900;
• after 6 months, a further penalty of 5 per cent of the tax due or £300, whichever is greater; and
• after 12 months, another 5 per cent or £300 charge, whichever is greater.

4.  There are also additional penalties for paying late of 5 per cent of the tax unpaid at: 30 days; 6 months; and 12 months."

Tax does have to be taxing.

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Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance 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 Solar Tax Investigation Insurance



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Oops!

All human beings make mistakes, therefore kudos to HMRC for proving that it too is all too human wrt a £577K tax bill sent in error to a pensioner.

The Telegraph reports that retired councillor Don Yates, 72, who lives on an £11,000 a year pension, has been mistakenly sent a tax bill demanding a payment of £576,850.85.

The letter from HMRC was sent last month on December 20, which told Mr Yates to settle up his tax bill as soon as possible.

Mr Yates said that he received a similar letter from the tax office in November, but at the time he misread the bill. Mr Yates at first thought the bill was for £384, when in actual fact HMRC said he owed £384,567.25.

The pensioner thought nothing more of the letter and cast it aside, believing HMRC officials had made an innocent mistake.

But having receiving a second tax bill a month later Mr Yates has now contacted HMRC to rectify the mistakes.

The human element, for the computer systems only react/process to what is input, in companies and government organisations can never be entirely "automated away".

Tax does have to be taxing.

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Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

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Fake HMRC Sites

A timely warning in the Guardian, alerting those who file tax returns online not to be duped into paying fees to websites that claim to check and file your return with HMRC.

As per the Guardian:

"Mike Walker lost £400 after googling "hmrc" to file his tax return. He was directed to taxreturngateway.com, and realised too late that it was not the official government site. "It looked very similar, but it was only once I'd gone through the process of filing my return and made a payment of £400 that I realised it wasn't the same," he says.

Walker adds: "I thought the official site had changed from previous years to make it cleaner and simpler to use."

When filing your return online only use the offcial HMRC site.



Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance 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 Solar Tax Investigation Insurance



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"

Open Letter To Lin Homer

Here is the text of an open letter to Lin Homer, written and published by Stuart Jones, regarding RTI and how it affects small businesses:

"An open letter to Lin Homer, the chief executive of HMRC, on behalf of small businesses and their advisors

Your recent press release (RTI package of help for micro businesses) which proudly tells us that

almost 93% of employers …..are now using the new process[RTI] to send PAYE information about their employee in real time, and the majority are finding the new system easy to use

glosses over the issues facing small businesses and their advisors.

Yesterday morning your Colchester Debt Management Unit contacted one of my clients to ask them to pay the £609.20 still owing in respect of their Month 6 PAYE.

When we spoke to the office, on behalf of our client, we were told that they had only paid £7,311.78 but the Full Payment Submission ( FPS) showed a liability of £7,920.98. On checking our records we discovered that the FPS we had submitted showed a liability of £7,311.78. No tax was due. When we explained this to the office we were told that it was must be a fault in our software, rather than HMRC’s, and we should contact our software provider.

When we did, moneysoft, our software provider, was surprised that HMRC should suggest that it was their software at fault as there was evidence that this was a common problem affecting many different software providers. Your Colchester office had, in fact, told us the same but were still not prepared to accept that the HMRC software was at fault.

Moneysoft showed us how to extract the information supplied to HMRC in XML format which we checked and found in agreement with the paper report we had discussed with HMRC.

Having proved our figures we contacted your Colchester office who were unable to explain why the figures differed. We were told to write to your Customer Operations Employer Office, enclosing a paper copy of the XML submission report, asking for the difference to be investigated.

All in all, we spent an hour and a half investigating an error caused by a fault in your computer system. Our client will not pay us for this work. HMRC will not reimburse us. Why should small businesses and their advisors be penalised for faults in a system which has been forced on us?

Your press release mentions giving micro businesses up to two years to adapt. Leaving aside the problem of adapting to a system which doesn’t work, why should businesses yet again have to change their ways, at considerable cost, to fit in with HMRC?

Paul Aplin, in this year’s Hardman Lecture  (I understand you were a guest) asked why the one-in-two-out rule for business red tape does not apply to HMRC?

Small and micro businesses cannot be expected to be the government’s unpaid tax collectors and administrators. The time has come to call a halt to the red tape.

The tax tail has to stop wagging the business dog."

Comments and views welcome.


Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance 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 Solar Tax Investigation Insurance



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"

Repayment Matters

In the run up to Christmas Accounting WEB published this (see below) from a tax professional, who highlighted an issue wrt delaying tactics apparently being used by HMRC wrt refunding overpayments:

"This isn't so much a question as a warning to practitioners and I feel something that warrants national press attention, though I could do with some opinion on what to do next.

We all know about P35 overpayments from 2012/13 and HMRC's new stance on not revealing them on the phone unless you specifically ask about them, or refusing to repay them until you come up with a reason that satisfies them etc, but this one takes the biscuit and in my opinion, may be illegal.

A client overpaid PAYE/NI for 2012/13 because the old accountant advised the wrong amount of PAYE for a couple of months. We wrote back to their standard letter in August and explained this very thing, and confirmed that the figures were correct in all respects.

Because we'd had lord knows how many letters like this from HMRC asking for "reasons" and then prevaricating and delaying such repayments, in that letter we stated that having fully explained ourselves, we would not enter into protracted correspondence such as other cases and told them to reallocate the overpayment against 13/14 and that we had told our client to reduce their next payment accordingly.

We heard nothing further from HMRC (though they say they wrote in September asking for more info but that "we may not have received the letter"). We didn't which is suspicious.

However here's the crux - it turns out HMRC deliberately removed the overpayment from 12/13 by filing a proforma P35 which increased the tax and NI. I believe they didn't issue any notification to that effect.

As a result, my client began to get harassed by Debt Management units who despite us explaining what had happened, actually said to us on the telephone that they would continue chasing our client regardless. This has upset her considerably.

A formal complaint went in and here's the shocker - they've come back to me and I quote directly:
"As a temporary measure to protect the unjustified overpayment from being reallocated...by another HMRC department...we captured a pro-forma P35 on 5th August 2013 whilst issuing final further information letter to you".

At this point I challenge this as I'm, fairly sure that no letter went out, though they themselves said only "a request for further information" went out - not notice of alteration of figures. Either way, we didn't receive it.

They continue:
"Please note there is no statutory authority that permits HMRC to prepare a pro-forma P35, this is our internal procedure to protect the unjustified overpayment and a pro-forma P35 does not permanently remove the overpayment".

Given the P35 went in during April, and they still had removed the overpayment at 16th December when they capitulated and processed my complaint, I would say it was very much permanently removed - especially as they admit that the final information letter says "if you don't respond then we'll leave the payment on the record". I would also say that "there is no statutory authority that permits HMRC to prepare a pro-forma P35" means "we have acted illegally and beyond our powers".

What do people make of this? We're well used to overpayment reticence with HMRC, but I feel this oversteps the mark and I'm not sure what to do next. 

Can I file a Money laundering report against HMRC, as I feel this is very much proceeds of crime! 

Either way, if HMRC are openly removing overpayments and clients are not receiving letters saying so, this to me implies that HMRC internal procedure is basically covering up and preventing the repayment of taxpayer's money."

Comments and views are, as always, welcome.

Have any loyal readers experienced similar problems?

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance 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 Solar Tax Investigation Insurance



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"

The Dog Ate My Homework!

As the 31 January tax return deadline looms, HMRC have published the ‘Top 10 oddest excuses’ (in HMRC's eyes) for sending in a late return.

"1.  My pet goldfish died (self-employed builder);
2.  I had a run-in with a cow (Midlands farmer);
3.  After seeing a volcanic eruption on the news, I couldn’t concentrate on anything else (London woman);
4.  My wife won’t give me my mail (self-employed trader);
5.  My husband told me the deadline was 31 March, and I believed him (Leicester hairdresser);
6.  I’ve been far too busy touring the country with my one-man play (Coventry writer);
7.  My bad back means I can’t go upstairs. That’s where my tax return is (a working taxi driver);
8.  I’ve been cruising round the world in my yacht, and only picking up post when I’m on dry land (South East man);
9.  Our business doesn’t really do anything (Kent financial services firm); and
10.  I’ve been too busy submitting my clients’ tax returns (London accountant).

All of these people and businesses received a £100 penalty from HMRC for filing late. They appealed against the decision using these excuses, but were unsuccessful.

HMRC’s Director General of Personal Tax, Ruth Owen, said:
“There will always be unforeseen events that mean a taxpayer could not file their tax return on time. However, your pet goldfish passing away isn’t one of them.

If you haven’t yet sent your 2012/13 tax return to HMRC, you need to do it online and pay the tax you owe by the end of January. With all the help and advice available, there’s no excuse not to.”

To send an online tax return, you must be registered for HMRC Online Services. This involves HMRC sending you an Activation Code in the post, so allow a few days for this to arrive. To register for HMRC Online Services go to www.hmrc.gov.uk/online and follow the on-screen instructions."

Has anyone seen other "eccentric" excuses for late filing?

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance 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 Solar Tax Investigation Insurance



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"

Backlog

HMRC’s large-business service, which deals with the UK’s 770 largest companies, had 2,314 unresolved enquiries into the companies' tax affairs on March 31 2013, according to figures released to Accounting WEB under the Freedom of Information Act.

Approximately one third (737) of the unresolved enquiries at the large-business service are more than three years old.

Paul Harrison, UK head of tax investigations at KPMG, was quoted by Accounting WEB:

“It’s taking far too long for HMRC to resolve these enquiries.

The challenge will become more intense for HMRC over the next few years as it cuts more jobs.”

A valid point. However, where litigation is involved (should HMRC and a business digress in their respective opinions as to how much tax is owed) the time factor is also dependent on the legal system.

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance 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 Solar Tax Investigation Insurance



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"