MSE News: Tax chaos Q&A: How to fight HMRC demands

GARDINER

dori2o I am not arguing that keeping personal information up to date is important BUT that is not what this thread is about. Pennypinchingmum asked for advice about the underpayment that she was told about. She says that HMRC were advised and confirmed that they had all of the information. To be fair employees simply know that they have to hand in their P45 to an employer or complete a P46 and it is assumed that everything will fall into place after that. The alternative is that employees take full responsibility for ensuring that records are xferred to the correct employer database without the need for the P45 system. If HMRC has a system in place then employees are entitled to believe that it will work correctly without the need for constant monitoring. I think that if the Government are truthful it will transpire that the fault lies with managements instructions to dispose of, without action, the 'movements' computer advice printouts (generated under the old COP system) which told admin assistants how to proceed with a particular case. That was back in 2004/05 and I knew it would all end in tears.

chrismac1

Well said Gardiner, an HMRC guy who has realistic expectations about what to expect from the public.

Anyone else on this site should take careful note of dori's comments because that sort of attitude is exactly what you can expect in general when you call or write to HMRC. In plain English, IT IS YOUR FAULT even if all of the evidence points to the contrary.

If you are purely a PAYE employee you have a right to assume that your employer keeps HMRC properly informed about your cirucmstances via P45s, P46s, P35s, P60s, P11ds, P9ds, P38s and a myriad of other forms the tax collectors have dreamt up just to make things as complicated as possible.

Woe betide the employer who gets behind with these forms or gets them wrong! A ton of bricks descends on the employer in the shape of fines, inspections which take up a load of time and effort, and so on.

After all this, we then find that the thing is still a complete mess. This is mainly the fault of the last Government who ran it about as badly as it is possible to run a tax system and encouraged some of the worst tendencies of the HMRC staff to run riot - such as attacking "husband and wife" companies, IR35 (a method for claiming that millions of self-employed people were actually employees despite stacks of evidence to the contrary).

Another example:

A client of mine has two sources of income:

1. A non-taxable invalidity benefit which will remain non-taxable until his death.

2. A pension which is £4,000 less than the tax-free allowance and which therefore will also never attract a tax liability.

So why on earth does this guy need an accountant? I'll tell you:

1. He has had tax letters and demands from 8 different tax offices.

2. His brother panicked - understandably given the fact that bailiffs were being mentioned by our friendly HMRC people - and coughed up over £1,800.

Within a few months of a letter from me, all the money was repaid and one of the tax offices has written to confirm this guy has been removed from the database of "people to get a tax return". I can only hope the other 7 offices have got this message.

Note that this guy has a long-term mental illness and is one of the most socially vulnerable taxpayers you could ever wish to meet, on one of the lowest incomes you could ever wish to find.

If they can do this to him, what could they do to you?

dori2o

GARDINER wrote: »

To be fair employees simply know that they have to hand in their P45 to an employer or complete a P46 and it is assumed that everything will fall into place after that.

That's the point though, they don't, at least not all of them, especially the younger generation. it's amazing how many people call HMRC and complain because they are on a BR code, yet when you ask if they have handed in a P45, or completed a P46, in the majority of cases the answer is NO.

chrismac1 wrote: »

Anyone else on this site should take careful note of dori's comments because that sort of attitude is exactly what you can expect in general when you call or write to HMRC. In plain English, IT IS YOUR FAULT even if all of the evidence points to the contrary.

Is that what I said.

What I actually said, if you had cared to read my post, was that you are responsible for keeping your records up to date. How else are HMRC to know when things change. If you have done that, and it can be proven, then fine any underpayment will be waived, you don't even need to write in to appeal these underpayments, it can be dealt with via the phone assuming it is noted on the record when the information was given, that the information given was correct i.e it wasn't the information given that caused the underpayment, and that HMRC did not act upon it withion the timescales from the time it was received.

Simply because I am coming on here and explaining what you should and should not do does not mean that I am defending the department, I am trying to give the best advice possible. What good would it be to come on here and say

'don't worry, you didn't tell us you had changed address, had a company benefit, with 3 sources of income totalling in excess of the higher rate limit with all of them only having the basic rate of tax deducted, but never mind HMRC will waive the charge'

because that simply is not true.

The advise throughout my posts in the last week has been.

Read the assessment, contact HMRC for an explanation, if you disagree and have informed hmrc of changes at the time they happened say so and they will review the situation over the phone, if you are correct and it is revenue error they will waive the charge, if you didn't they won't, it's simple. But always tell them of changes, even if it's only an address change, because your employer has no responsibility to do this on your behalf.

hannah8008

Dear BoGof,

My question about the law and income tax was a genuine one. Income tax was first introduced in 1842 by Sir Robert Peel, and has been repealed and changed so often that I wondered if there had been changes since the last income tax act in 2005, and if infact this act had been made law. That might sound a bit silly but some times things slip through the net even something as large as this. Can anyone tell me if it did infact get passed as a law or if the government did infact just assume that we would all just comply so it never got done. This has happened in other countries and has not been discovered till later when someone has done some digging.

I would like to thank everyone who is trying to help others on here and not just being rubbish for the sake of it. (That said it is not directed at any one in particular just a general statement of my own opinion)
Kind regards

Paul_Herring

hannah8008 wrote: »

Income tax was first introduced in 1842 by Sir Robert Peel,

Erm - income tax is a bit older than that.

Another income tax was implemented in Britain by William Pitt the Younger in his budget of December 1798 to pay for weapons and equipment in preparation for the Napoleonic wars.

Any

Gardiner and Di2o

I completely agree with both of you

I am also an accountant and I am fully aware of both points of your argument - from my experience this BOTH things are the problem

Gardiner - employees really do not care about tax and haven't got even basic understanding of tax issues and are very quick to blame payroll and HMRC for things neither of those could control because they simply didn't know about addittional circumstances

Dori2o - Even though I said the above, HMRC screwed up big style here - numerous reports (and experience) from people who rung their code is wrong, and then rung again and again and none of the time they got correct code!! And this going for years!! Yesterday I've spoken to lady who is on benefits - poor lady is disabled - and they managed to screw tax on that!!!! When both is managed by the government!!

Mahmood_Reza

Paul_Herring wrote: »

Erm - income tax is a bit older than that.

Add to that - it was abolished in about 1816 (?), reintrodcued in the 1840s and is still a 'temporary tax' - each year it is renewed by a new Finance Act.

chrismac1

Within my client base and staff on the payrolls of my clients, the people affected by this - or most likely to be affected - include:

1. The mentally ill person on invalidity pension already mentioned above.

2. Several teenagers and students who've had various jobs and various tax codes, often emergency ones not giving them their full ration of tax-free allowances.

3. Some company directors whose employers have messed up the company car benefit calculations - which is understandable as that in itself is now 10 times more complicated than it was in 1997.

4. A trainee doctor who has worked for 10 different GP practices in his training period to gain experience.

Just how realistic is it to expect anyone in categories 1, 2 or 3 above to be able to sort out their tax properly? How many teenagers and students can realistically be expected to notify HMRC every time they change address, dori?

In the case of the doctor this neatly sums up the public sector. He is a front line public sector worker who has worked in A&E as well as GP practices.

The payroll staff at the healthcare trust have mucked up his P45s and P46s, failed to issue him with P60s, and generally done their best to keep his mind off his patients.

Then along come another bunch of backline public sector staff - HMRC - accusing him of paying too little tax when he has paid too much, showering him withe demands to pay and threats of bailiffs. With a little trouble they could have seen that the employer was mostly to blame here. But no, let's take the quick and easy option and blame the taxpayer and hound him for money.

If the new Government can sort out the system so the front line guy is left to work with his patients, and the backline staff either shape up or get out, there's a chance we can BOTH cut the deficit and have cheaper public services.

GARDINER

'If the new Government can sort out the system so the front line guy is left to work with his patients, and the backline staff either shape up or get out, there's a chance we can BOTH cut the deficit and have cheaper public services.'

EXTREMELY WELL SAID chrismac1 anyone working in the private sector making such huge blunders would be sacked instantly and it would very likely be upheld by an Employment Tribunal. Incompetence is a fair reason for dismissal.

dori2o

chrismac1 wrote: »

How many teenagers and students can realistically be expected to notify HMRC every time they change address, dori?

Why shouldn't they? They are ADULTS, in the real world, why should they be spoon fed. Once you leave high school I'm afraid it's time to grow up and take responsibility for your own affairs.

I can guarantee that if a correct address was required in order for a Giro or other kind of benefit payment to be sent out to them, they'd be on the phone to change their address as soon as the change happened.