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  • FIRST POST
    • chrismac1
    • By chrismac1 27th Mar 17, 9:40 AM
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    chrismac1
    Warning - HMRC have mucked up 2016-17 self-assessment
    • #1
    • 27th Mar 17, 9:40 AM
    Warning - HMRC have mucked up 2016-17 self-assessment 27th Mar 17 at 9:40 AM
    Despite having had a year to get this right, HMRC's own database software contains errors for 2016-17. In turn this means all commercial software replicates the errors, because in order to get the returns to file electronically suppliers must pass the HMRC flags including those which have been mucked up by HMRC.



    The problems stem from the interaction between the separate allowances for savings and dividends, the personal allowance, and the additional rate of tax on income over £150,000. The two groups of taxpayers affected appear to be:
    1. those with total income made up of savings and non-savings income over £32,000 of which the non-savings income is between £11,000 and £16,000
    2. those with non-dividend income of £27,000 to £32,000 plus dividends which take their total income to more than £145,000
    Individual taxpayers (not trustees or personal representatives) are entitled to the dividend allowance of £5,000, which taxes the first £5,000 of dividends at 0%, within the tax band the dividends fall into. Dividends are taxed as the highest slice of income.

    In both of the above scenarios the tax due per HMRC will be £1,000 more than is legally due. What a surprise they screwed it up in that direction!
    Hideous Muddles from Right Charlies
Page 1
    • Pennywise
    • By Pennywise 27th Mar 17, 4:44 PM
    • 8,952 Posts
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    Pennywise
    • #2
    • 27th Mar 17, 4:44 PM
    • #2
    • 27th Mar 17, 4:44 PM
    Another reason why the ridiculous MTD rules coming in next April (2018) for which HMRC havn't yet decided on the detail MUST be delayed by at least 2 years. If they can't program the basic SA return system given a years' notice, they havn't a hope of getting their systems ready for a fundamental change such as MTD. It's just like watching a car crash.
    • chrismac1
    • By chrismac1 27th Mar 17, 5:22 PM
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    chrismac1
    • #3
    • 27th Mar 17, 5:22 PM
    • #3
    • 27th Mar 17, 5:22 PM
    It's worth saying these are only the known errors. A numpty called George Osborne came up with numerous fiddly little allowances which interact with each other in complex ways. The 2 scenarios above are actually pretty straightforward, so the fact HMRC have bungled these having had a year to get it right is crap, even by their drivelly standards.

    It's almost certain that somewhere out there are some people with various more complex income streams than the known scenarios, which the twits running the UK tax system will have butchered even worse than the known erros.
    Last edited by chrismac1; 27-03-2017 at 8:51 PM. Reason: Swearing removed by forum team
    Hideous Muddles from Right Charlies
    • Wayne O Mac
    • By Wayne O Mac 27th Mar 17, 6:30 PM
    • 196 Posts
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    Wayne O Mac
    • #4
    • 27th Mar 17, 6:30 PM
    • #4
    • 27th Mar 17, 6:30 PM
    Wolf! Wolf! No, honestly, there really is a wolf this time!
    • chrismac1
    • By chrismac1 27th Mar 17, 8:57 PM
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    chrismac1
    • #5
    • 27th Mar 17, 8:57 PM
    • #5
    • 27th Mar 17, 8:57 PM
    I'm sure everything will be just hunky dory next year when MTD plus the Scottish income tax come in at the same time.
    Hideous Muddles from Right Charlies
    • Cook_County
    • By Cook_County 28th Mar 17, 11:13 AM
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    Cook_County
    • #6
    • 28th Mar 17, 11:13 AM
    • #6
    • 28th Mar 17, 11:13 AM
    We all know that Tim Good & Giles Mooney are making a million quid or so out of accountants by selling this SHOCK HORROR story everywhere. Of course HMRC & other tax software can cope with it.
    • chrismac1
    • By chrismac1 28th Mar 17, 5:14 PM
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    chrismac1
    • #7
    • 28th Mar 17, 5:14 PM
    • #7
    • 28th Mar 17, 5:14 PM
    Just to be clear about this, today I had a client call me to say she was being threatened with a fine for failing to submit her VAT return for period 01/17. On the HMRC VAT database when I logged in it correctly showed her to have submitted 12/16 on time and that the next quarter to submit is 03/17.

    So we have to conclude the database just completely screwed up the letter it wrote her, which by the way had neither a person named on it or a phone number. Really unprofessional.

    I have 140 clients and I get on average one phone call per week about this sort of rubbish. My standard guidance to clients on this is:

    "Whilst the UK has the sixth largest economy in the world, our tax administration quality is probably more comparable to Bangladesh, with no disrespect to that country. Your first question when receiving a letter from HMRC should always be "Is this just an error-strewn load of drivel?" In my experience the answer will be yes around 30% of the time. Only once you are confident HMRC has actually managed to process things right, and add 1 plus 1 to get 2, should you decide you need to take any sort of action. If the HMRC letter contains threats and menaces please forward me a copy so I can get rid of them for you."

    NEVER, repeat NEVER, just accept anything from HMRC at face value.
    Hideous Muddles from Right Charlies
    • Pennywise
    • By Pennywise 29th Mar 17, 8:34 AM
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    Pennywise
    • #8
    • 29th Mar 17, 8:34 AM
    • #8
    • 29th Mar 17, 8:34 AM
    To add to Chrismac's experiences, I've just had a cracker.

    Husband and wife, both made various gift aid payments over the years, neither told me about them, so no claim made on their SA returns for higher rate tax relief.

    I wrote identical letters, posted the same day, the only differences being the client name and UTR numbers, and the amounts of gift aid claims being made to adjust prior year SA returns.

    Two letters back, received same day, neither named, one agreeing and saying payment plus interest being made. The other citing all kinds of rubbish reasons as to why a late claim can't be made.

    Just shows the lack of consistency between HMRC workers and lack of quality control and staff training.
    • uknick
    • By uknick 29th Mar 17, 11:11 AM
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    uknick
    • #9
    • 29th Mar 17, 11:11 AM
    accountingWeb article on this problem
    • #9
    • 29th Mar 17, 11:11 AM
    http://www.accountingweb.co.uk/tax/hmrc-policy/errors-in-tax-return-software-force-paper-filing
    • Pennywise
    • By Pennywise 29th Mar 17, 11:50 AM
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    Pennywise
    We all know that Tim Good & Giles Mooney are making a million quid or so out of accountants by selling this SHOCK HORROR story everywhere. Of course HMRC & other tax software can cope with it.
    Originally posted by Cook_County
    As confirmed by the accountingweb article above, HMRC & other tax software CAN'T cope with it and HMRC instructions are to submit a paper return instead.

    Trouble is, how do people know that what they submit electronically isn't right. I think taxpayers can reasonably be expected to assume that official tax submission software is correct. How would they know to check HMRC's list of circumstances when paper returns are needed? It doesn't look as if HMRC's system will flag up that your submission is wrong, so you'll blindly pay too much tax.

    Another point is what if you don't submit electronically until say December, then discover you have to file manually because the electronic system doesn't work properly, but you've missed the paper return filing deadline?

    You really couldn't make it up!
    • polymaff
    • By polymaff 29th Mar 17, 6:33 PM
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    polymaff
    Last year's specification over-ran the start of the applicable year by three months.

    So SNAFU
    • chrismac1
    • By chrismac1 29th Mar 17, 7:54 PM
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    chrismac1
    I hope HMRC are going to fine themselves for these careless and negligent errors. That would probably be a penalty of 80%, but as we're mates I'll call it a round £2bn.
    Hideous Muddles from Right Charlies
    • Cook_County
    • By Cook_County 29th Mar 17, 8:04 PM
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    Cook_County
    As confirmed by the accountingweb article above, HMRC & other tax software CAN'T cope with it and HMRC instructions are to submit a paper return instead.

    Trouble is, how do people know that what they submit electronically isn't right. I think taxpayers can reasonably be expected to assume that official tax submission software is correct. How would they know to check HMRC's list of circumstances when paper returns are needed? It doesn't look as if HMRC's system will flag up that your submission is wrong, so you'll blindly pay too much tax.

    Another point is what if you don't submit electronically until say December, then discover you have to file manually because the electronic system doesn't work properly, but you've missed the paper return filing deadline?

    You really couldn't make it up!
    Originally posted by Pennywise
    This article quotes no-one from HMRC. It is very, very one-sided. We have no idea if HMRC software will be programmed to address this issue; all we have to date is 1 lot of salesmen trying to persuade the tax and accounting universe that their software is a compulsory purchase this year. Chrismac1 has helped make those guys a bit more cash; but we really still do not know what HMRC think of the issue.
    • polymaff
    • By polymaff 29th Mar 17, 8:37 PM
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    polymaff
    This article quotes no-one from HMRC.
    Originally posted by Cook_County
    err, except that it does. Reading:

    "HMRC has added the scenarios for taxpayers in groups A and B to their exclusions list which was issued on 17 March"

    might suggest that one should Google:

    self assessment exclusions 2016/17

    and you'll find that exclusions 51 and 52 are HMRC's own admission that these faults are still there (as of 17th March, the document's date) - and that the workaround is a paper submission
    • Pennywise
    • By Pennywise 30th Mar 17, 8:01 AM
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    Pennywise
    This article quotes no-one from HMRC. It is very, very one-sided. We have no idea if HMRC software will be programmed to address this issue; all we have to date is 1 lot of salesmen trying to persuade the tax and accounting universe that their software is a compulsory purchase this year. Chrismac1 has helped make those guys a bit more cash; but we really still do not know what HMRC think of the issue.
    Originally posted by Cook_County
    Have a look at HMRC webpage:-

    https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/601946/2017-exc-indi.pdf

    Items 51 and 52 on page 9 explain the failings in the online filing system which also follows through to commercial software as commercial software suppliers must use the equations/methodology as specififed by HMRC. Their web page clearly shows a paper return is required. More worryingly, it shows that the issue will be "fixed" for 17/18 tax returns, so it appears no plans to correct it for 16/17 returns.

    These changes were announced over a year ago. HMRC have failed in that they didn't understand what the changes meant and pressed ahead with their systems programming on the wrong basis. It was late in 2016 when Tim Good noticed the errors and told HMRC, but by then it was too late for HMRC to make the corrections.

    Only one organisation at fault here - HMRC 100%. You seem to want to shoot the messenger - the people who discovered the error and put themselves out to help correct it.
    • chrismac1
    • By chrismac1 30th Mar 17, 8:44 AM
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    chrismac1
    That highlights how our tax system is on a par with Bangladesh. When you are informed "late in 2016" that your programming has glitches, you still have THREE MONTHS left to sort them. To any commercial business that is light years' of time, to HMRC it is not enough time.

    RUBBISH beyond belief. Making Tax Diabolical is going to be a right mess, because let me tell you by the standards of the 2017 tax returns HMRC already have nowhere near enough time left to fix all the myriad problems there are in the very very sketchy specification they have seen fit to issue for this massive tax system change.

    If you make a big mess of easy peasy Primary 1 stuff, don't even bother putting your name down for A levels less than a year later. But that is exactly how HMRC is behaving right now.
    Hideous Muddles from Right Charlies
    • chrismac1
    • By chrismac1 30th Mar 17, 8:47 AM
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    chrismac1
    In all fairness my comments with regard to Bangladesh are very probably a gross insult to the Bangladesh tax authorities and I apologise to any Bangladeshi passport holders who have been offended by them.
    Hideous Muddles from Right Charlies
    • chrismac1
    • By chrismac1 10th Jul 17, 11:50 AM
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    chrismac1
    Update - per Rob Ellis, CEO of BTC Software, HMRC have finally woken up to the fact that the current paper tax submission plan will result in a mountain of paper in January 2018, when on average 40% to 45% of self-assessment tax returns are filed.

    So for the first ever time HMRC are considering fixing the glitches in their software for the 62 or so of identified mess-ups currently hard-wired into all UK tax calculations for 2016-17.

    This means that for the next 2 months or so, if you are affected the best course of action in my view is to do nothing. If HMRC move quickly then you can file as normal. After 2 months, assume HMRC are going at their normal snail pace and file on paper.
    Hideous Muddles from Right Charlies
    • TheCyclingProgrammer
    • By TheCyclingProgrammer 10th Jul 17, 12:17 PM
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    TheCyclingProgrammer
    I wonder if these issues are having a knock-on effect on third-party integrations - still no sign of 2016/17 updates to FreeAgent to enable tax return submission. FreeAgent could just be being slow I guess - anyone else noticed delays with any other providers (Kashflow, Xero, Quickbooks etc.) that support tax returns?
    • polymaff
    • By polymaff 10th Jul 17, 12:54 PM
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    • 678 Thanks
    polymaff
    So for the first ever time HMRC are considering fixing the glitches in their software for the 62 or so of identified mess-ups currently hard-wired into all UK tax calculations for 2016-17.
    Originally posted by chrismac1

    Don't hold your breath

    20+ efforts to get this right, and HMRC thinks that the next issue - developed under pressure - will solve all of these issues?
    Last edited by polymaff; 10-07-2017 at 5:46 PM.
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