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.

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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.

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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"

Stemcor In Distress

According to the Guardian, Margaret Hodge will be suffering a drop in income as Stemcor seems to have hit the financial rocks:

"It ran up debts of more than $1bn (£620m) with a host of banks through its revolving credit facilities. But the business, which suffered massive losses in its international trading division, has struggled to service the loans.

The banks agreed to a number of standstill deals on repayments throughout this year and are close to launching a major restructuring, with a host of its businesses to be sold around the world.....

In the meantime, some bankers to the company have been selling their debt to vulture funds led by the Manhattan billionaire Leon Black’s Apollo at as little as 30 cents for $1 worth of loan.

Companies like Apollo buy up debt cheaply and demand dramatic change to the company to increase the value of the loan. Others thought to be buying into Stemcor’s “distressed debt” include Australia’s Anchorage Capital Partners and London-based Duke Street."

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"

No Minister!

The Guardian recently reported that Treasury minister, David Gauke, has been reported to HMRC for advertising an unpaid six-month "training post" at his constituency office.

For why has he been reported?

HMRC is in charge of enforcing the national minimum wage law for workers and interns, and only last month launched a crackdown on employers not paying the minimum wage and promised to investigate all cases referred to them in which firms use long-term unpaid interns.

HMRC has also warned businesses that they could be "publicly named and shamed" and may be liable for a £5,000 fine if they are found to be in breach of national minimum wage laws.

Gauke said:

"This is advertised as a position for a volunteer, enabling the successful applicant to gain experience of political campaigning and office work – working alongside association officers who are also volunteers."

Gus Baker from Intern Aware said:

"Based on David Gauke's previous advertisement for unpaid interns, at Intern Aware we find his latest advert for an unpaid training post to be highly suspicious.

David Gauke should know that if this intern is doing real work under a contract they will be entitled to the national minimum wage. As he is the minister responsible for HMRC, which enforces minimum wage law, he should know better."

An HMRC spokesperson said:

"HMRC cannot discuss individual cases for legal reasons. Anyone who thinks they are not being paid the legal wage can call HMRC's Pay and Workers Rights hotline on 0800 917 2398."

A case of do as we say, not as we do!

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"

HMRC Launches Working With Tax Agents Blog

My thanks to Stuart Jones who pointed me in the direction of HMRC's new blog aimed at tax agents.

Stuart makes a wry observation about the picture used on the front page.

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"