£10,000 tax bill from y/e April 2006 - - HELP

macwah97

My husband retired in September 2005 and received lump sum etc. HMRC had wrongly taxed him at a lower rate and we were aware that there would be extra tax due.

We contacted HMRC when submitting y/end April 2006 forms and were told that they would contact us later and to submit the standard form and information.

This we did with a shortfall of £171.30 - fine.

At some point in 2008 they submitted their calculation for y/end 2006. This we did not receive - no lies here as my forms went astray for a period of time also - duplicates submitted.

My husband has been in contact with HMRC at various stages over the years since 2006 infact asking for his code to be changed as he was working as well as having a pension - not once did anyone query this outstanding amount until now when they have added over 2000 if interest onto the original amount.

On top of this after having been told he would not need to submit further returns in 2007 we have been billed for non-return for these years to date - in process of completing duplicates.

Is there any way we can reduce this amount owed. Not completely up to speed on the legislation would have been once. Do not have any assets to pay in lump sum and husband is not no longer working and on DLA which is going to be increased as his condition has got worse

Apologies for mammoth post but am beating head off a brick wall here. To compound matters my husband now suffers from a recognized mental health problem and these matters are not easily discussed nor sorted as he does not remember.

Thanks.

dori2o

macwah97 wrote: »

My husband retired in September 2005 and received lump sum etc. HMRC had wrongly taxed him at a lower rate and we were aware that there would be extra tax due.

We contacted HMRC when submitting y/end April 2006 forms and were told that they would contact us later and to submit the standard form and information.

This we did with a shortfall of £171.30 - fine.

At some point in 2008 they submitted their calculation for y/end 2006. This we did not receive - no lies here as my forms went astray for a period of time also - duplicates submitted.

My husband has been in contact with HMRC at various stages over the years since 2006 infact asking for his code to be changed as he was working as well as having a pension - not once did anyone query this outstanding amount until now when they have added over 2000 if interest onto the original amount.

On top of this after having been told he would not need to submit further returns in 2007 we have been billed for non-return for these years to date - in process of completing duplicates.

Is there any way we can reduce this amount owed. Not completely up to speed on the legislation would have been once. Do not have any assets to pay in lump sum and husband is not no longer working and on DLA which is going to be increased as his condition has got worse

Apologies for mammoth post but am beating head off a brick wall here. To compound matters my husband now suffers from a recognized mental health problem and these matters are not easily discussed nor sorted as he does not remember.

Thanks.

Once the returns are submitted it will then give you a better view on the actual position.

At the moment I presume you have a raft of penalties, interest charges and determinations which amount upto the £10000.

So get the returns completed and sent in asap before doing anything else.

Once the actual position is known then you can go about makiing any representations to HMRC that are needed.

If there is no further tax owing for the years 2007 onwards, then any penalties/determinations will be reduced to nil/cancelled along with any interest due on these.

If their remain tax libility for 2007 onwards then this will have to be paid, but you can then write to object to any penalties/interest giving your reasons why the forms were not completed within their deadlines, and why the original 2006 payment was not paid.


As an aside you say HMRC incorrectly taxed the lump sum at a lower tax rate, BUT, if this payment was made after leaving the company and after the P45 was issued, then the employer had no choice but to tax the lump sum at the basic rate (22%) as this how there payments are dealt with no matter what tax rate is the individuals normal rate.

macwah97

Tax Due £8839.10
Tax overpaid £170.16
Duty Due £9009.26
Interest to 30/11/11 £2094.96

Amount Due £11,104.22

would that interest be correct for this amount of due duty?

chrismac1

First, have they done their sums right? I simply ask this because on all taxes - the last one was just last Friday on VAT, I probably get at least one per month - HMRC have a habit of sending out these assessments with either half a story or just plain blunders.

Your post implies that you are on self-assessment and that HMRC has been sending you out requests for submitting tax returns - do you agree this? If not, has HMRC got any evidence that they've asked you for tax returns? I've had two separate clients where they mixed up records and were sending my clients big bills for completely unrelated taxpayers. If you agree that you are under self-assessment, have you got your Unique Taxpayer Reference? If so, I recommend getting online access - or getting your agent or just someone helpful - to do this for you. Then at least you can see HMRC's side of the story for yourself.

Having done all that, you can then consider submitting tax returns and what the best way of doing that is. I suspect you are going to find representation useful, for one thing the Agent Account Manager part of HMRC is the only area where I consistently have a normal commercial conversation with them. In Friday's case they offered to raise an internal complaint on the debt managment people - an offer I declined - and also have done some other useful things which will quickly break the log jam my client has had with HMRC.

Your husband's age and condition may be ignored by the HMRC "system" but further up the line it becomes more relevant and I recommend getting that on the file in writing as it may prove useful in the months ahead until this is finally sorted.

macwah97

Lump sum was and pension is from a Government pension. Our belief is that my husband was kept on SA as he had an agency job as well as pension. Probably should have been off it 3 years ago.

Am contacting office on Friday as relevant person only works Fridays, and return required for Monday 31st October which is very exciting.

How do you claim for washing workclothes?

macwah97

Update:-

Met with Tax Inspector today and good and bad news......Good news - they acknowledge liability in letting this drag on for so long - there will be a reduction - not sure how much. BAD NEWS - bill to date is £15,000 when everything has been fixed. BAD NEWS we still have a BIG amount to pay - GOOD NEWS - possibility of 4 yr period - depends on determination.

TI has asked Interest Review Unit to look at interest charged as feels it is incorrect and to our detriment.

Also came to light that Pensions have been levelling an incorrect tax code on the pension for five years - not one code was in sync with current Tax Allowance - some to our benefit others overpaid to IR.......

Very much an ongoing situation but hopefully light at end of tunnel..........exhausted