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MSE News: Hundreds of thousands more tax errors found

edited 30 November -1 at 1:00AM in Cutting Tax
34 replies 4.7K views
MSE_GuyMSE_Guy MSE Staff
1.7K posts
I've been Money Tipped! Newshound! Chutzpah Haggler
edited 30 November -1 at 1:00AM in Cutting Tax
This is the discussion thread for the following MSE News Story:

"A whopping 450,000 will collectively face extra demands of £180m while a similar number could be owed cash ..."
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Replies

  • Joe65_2Joe65_2 Forumite
    148 posts
    When there are so many people relying on the Revenue to work it out for them, and we are hearing about so many cases it's frightening to think how many are really being wrongly taxed.
    An' each time the Revenue get it wrong and have to (quite rightly) right it off, it's all of us who must pay more to make up for it.

    I bet they'd be a lot more careful if it was their own ...
  • My husband has just received a repayment demand with no explanation. After ringing them to find out more details they don't know why and keep changing the tax year it applies to- the mess continues!
  • after my girlfriend got a rebate ive started looking to my tax codes and i got this horrible felling ive not paid enough,
  • Woah, can anyone tell me the max number of years they can go back like this? is there a limit?
  • MikeyorksMikeyorks Forumite
    10.4K posts
    Part of the Furniture Combo Breaker
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    6 years without questions ..... no time limit if evasion suspected. But the article makes it clear they've drawn a line in the sand at 07/08 (for PAYE) in respect of underpayments?
    If you want to test the depth of the water .........don't use both feet !
  • edited 15 January 2011 at 10:09AM
    skituscanycomskituscanycom Forumite
    9 posts
    edited 15 January 2011 at 10:09AM
    My horror story is that I am suddenly faced with a tax bill of over £5000 which I am expected to pay by the end of this month.

    You may think that I'm self-employed, but I'm not. I have PAYE deducted from my salary and naively thought that HMRC knows what it's doing and issues the right code to an employer. NOT SO!:eek:

    In my case, I am over 50 and receive an income from a pension which I am paying back into another pension and HMRC cannot cope with the fact that this pension income is much smaller than my proper income.

    Their system automatically allocates the pension income as the primary source and applies all the normal personal allowances etc. to it. Their system then allocates a BR (Basic Rate) code to my proper income, which means that tax at 20% is deducted from all of it.

    This causes two problems - firstly there is not enough income from the pension to deduct a meaningful amount of tax from it after allowances have been applied, and the BR code on my proper income does not collect any of the tax due at 40%.

    Result: DISASTER! Unexpectedly, I owe this huge sum of money which I am expected to find from somewhere :mad:

    How can this be right?

    How pathetic is it that HMRC cannot issue codes that work?

    The only advice that they could offer me was to "put some money in a pot" because the exact same disaster is looming for 2010/11 :eek:

    So DON'T assume that your NETT income is yours to spend. The taxman may want another big chunk of it and you'll be expected to pay.

    Ridiculously, I will now have to become a tax expert, work it all out myself and get my employer to use an 'artificial' tax code so as to deduct the right amount of PAYE. Or pay for an accountant. For PAYE. Unbelievable.
    :) I'd rather be skiing in Tuscany! :)
  • johnsmijohnsmi Forumite
    232 posts
    "The only advice that they could offer me was to "put some money in a pot" because the exact same disaster is looming for 2010/11 :eek:"

    This is happening to me too. I receive taxable incapacity benefit and an occupational pension. I received a bill for underpayments for 08/09 and 09/10 for £2100 connrct calculation. I also received 2 tax codes at start of year, occupational pension was to be tax free but 10/11 tax was to be taken from incapacity benefit, hasn't happened. I did talk to the tax people and they said that tax should be deducted in an ongoing basis but its not.

    So I am left to pay £2100 (discussed earlier in this forum) + a demand for tax year 10/11 in the future (will I definiately have to pay this?) and then probably a demand for tax year 07/08 as well.

    John
  • jenniferniljennifernil Forumite
    5.3K posts
    Part of the Furniture 1,000 Posts
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    It is not that difficult surely to add up all your various sources of income, deduct your allowances and work out the tax? No need for an accountant, just a calculator maybe.
  • edited 16 January 2011 at 3:17PM
    skituscanycomskituscanycom Forumite
    9 posts
    edited 16 January 2011 at 3:17PM
    johnsmi wrote: »
    "So I am left to pay £2100 (discussed earlier in this forum) + a demand for tax year 10/11 in the future (will I definiately have to pay this?) and then probably a demand for tax year 07/08 as well."
    John

    I have just been made aware of an article in Money Mail in the Daily Mail last Wednesday where HMRC have been ranked third in the wooden spoon awards behind "Talk Talk" and "Santander". Anyway, there is a little known rule A19 (maybe rapidly becoming a well known rule? :D) that allows for tax to be written off in some cases if, due to a coding error through no fault of your own, HMRC didn't tell you about the tax that you owed in a reasonable time. A reasonable time is up to 12 months following the end of the tax year. See here: hmrc.gov.uk/esc/esc.htm Also on another MSE thread.

    If you didn't have to do tax returns then you may qualify. In my case, because they asked me to do a tax return I found out approx. 9 months after the end of the tax year so I'm unlucky.

    Hope this helps!

    As for my comment about needing an accountant for PAYE under these circumstances, my point is that PAYE is supposed to be automatically correct.

    I venture to suggest that most people - especially in these hard times - try to budget to live within their nett income and do not anticipate that this may be wrong.

    Not everyone is comfortable about calculating these things and it's a terrible extra burden to have to do so in order to avoid an unexpected nasty surprise. HMRC should be able to get it right, shouldn't they :idea: If it just needs a calculator, then maybe HMRC need to get a new one? :)

    In my case they have now actually admitted that their system CANNOT allocate the tax codes in a way that will EVER work _pale_

    HMRC told me that their computer system refuses to allow them to designate my employment as my primary income. It has to be the pension.

    I couldn’t believe that this could be the case so the HMRC lady tried it whilst I was on the 'phone and sure enough, the system swapped it back again :doh:Sack the IT system designer I say :wave:
    :) I'd rather be skiing in Tuscany! :)
  • diablediable Forumite
    5.3K posts
    Received a letter from the tax office yesterday and I am entitled to £190 rebate so its not all bad news.
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