HMRC have lost £1000 of our money

4Chickens

Mr 4Chickens runs his own business as a sole trader and we choose to pay his Income Tax and National Insurance every month instead of saving it in an individual bank account, we do this so that we are not tempted to dip into it and end up with a shortfall on 31st January or 31st July.
We usually pay £1000 per month and it would appear that the cheque we sent them in June, that has been cashed, has been allocated to someone elses tax account. HMRC have known about this since the end of November and are still unable to locate it.
Because of this, their records show that we still owe them the best part of £1000 which is due for payment on 31st January but my records show that I have overpaid them by approx £27.
I have a nasty feeling that they are not going to find it before the 31st January.
I contacted HMRC in between Christmas and new year and put this senario to them and they said I should send them another cheque for £1000, I nearly wet myself laughing.
Will they start issuing us with fines if we don't stump up this extra £1000?
Is there some sort of procedure for placing Mr 4Chickens tax account 'in dispute'?
I have an accountant who is chasing them up but she said she has never experienced this with any clients ever.
Have any of you ever had a similar experience? If so, how was it finally resolved?
Cheers

chrismac1

This is in fact quite common and has happened with two clients of mine. In both cases it took HMRC more than 10 months to admit they'd made a mistake and reallocate the money to the correct place. In both cases the clients were sending cheques despite my strict instructions to only use electronic methods to pay HMRC because I have so little faith in the ability and willingness of their staff to quickly resolve such problems.

Even though your bank will charge, I recommend putting a tracing order on the cheque, or in some other way obtaining evidence HMRC have no way of denying that they have cashed the cheque into one of their bank accounts.

4Chickens

chrismac1

I requested a copy of the cheque from our bank and they sent a copy of both sides of the cheque. I scanned this document and sent it to my accountant and she has forwarded it to HMRC yet they still don't have a scooby doo

10 months? Holy !!!! batman

Another related question. When they do eventually find this money will they pay us interest on it? We usually get about £5 in interest from HMRC every year because we pay monthly and they deem it to be an overpayment until the monies are actually due on 31st Jan or 31st July. Will they include the missing/found £1000 in their calculations?

Mikeyorks

4Chickens wrote: »

I requested a copy of the cheque from our bank and they sent a copy of both sides of the cheque.

As HMRC cheque processing equipment placed the audit trail on the reverse of the cheque - they should have no difficulty tracing it. If you look at your copy - there will be the reference (10 x numerics and 'K') it was allocated to on the reverse. But sending the original and keeping the scan would have been the wiser thing to do. And sending it direct to HMRC even wiser still. Getting your Bank to trace is a silly suggestion - if there's an HMRC crossing stamp on the front.

10 months? Holy !!!! batman

Known to be prone to anecdotes / exaggeration which a lot of us find difficult to believe.

Will they include the missing/found £1000 in their calculations

Yes. They should allocate the payment with the original payment date.

If you're paying monthly by cheque you presumably don't have a machine printed payslip to send? Which increases the potential of error quite significantly. Cheques / payslips are processed on high speed transports and the reference on the payslips read by OCR cameras. They do not make mistakes. But where a payslip has to be manually created from a UTR (eg) written on the back of the cheque - real potential of human error with transcription errors. The UTR is protected by a modulus check - but some transcription errors will beat it.

If you want to pay monthly. It is far safer to use the Budget payment plan offered to the few who pay regularly in advance. It has to be via DD - but that proofs the UTR at the outset, so you will not get this type of problem. But you do need to be registered for SA online. Not sure if your accountant can do it if he does your filing.

http://www.hmrc.gov.uk/manuals/dmbmanual/DMBM201580.htm

http://www.hmrc.gov.uk/payinghmrc/selfassessment.htm#3

chrismac1

"Known to be prone to anecdotes / exaggeration which a lot of us find difficult to believe."

Anyone who thinks so needs to wake up to the realities of dealing with HMRC when "sorry this is not in our procedures" applies. Or just go onto other sites where accountants and tax agents exchange information and client issues. You'll see that ten months is nothing, even for large sums of tax being held up. It's normal to take 3 months just to get a reply to a letter. It's not all that unusual to phone up after 2 months to be told "We have no record of that letter / phone call / e-mail" at which point the whole charade potentially begins afresh from square 1.

It's more or less univerally agreed amongst accountants who've been dealing with HMRC for over 20 years that it has never been this chaotic, unprofessional, random to deal with HMRC. My own view is that there is a "difficult pile" which holds all the mixed records / unallocated cash / query cases which no-one in HMRC wants to go anywhere near. I will hold this view until HMRC begin operating at the same sort of service levels and deadlines the rest of UK professional life operates at.

Mikeyorks

And my own view - is that you are clueless when it comes to the mechanisms of how HMRC have to operate. You see nothing beyond the few fibres relating to the strands of your own few clients - and have no comprehension of how complex and time consuming it is where literally millions come together at the HMRC interface.

I was invited to sit in on an Open Day(s) AO Shipley held some years ago for accountants - consequent upon the problems accountants, in particular, were creating around the SA peak payment dates. Astonishing take up of over 200 - when considering Shipley sits so far out of its then catchment area.

A group of mainly KPMG people were talking to me at the end and 'What an eye opener. We were clueless as to the size, scale and complexity of the operation here. And the sophistication of the machinery has astounded us. We focus solely on our insular knowledge of how we perceive things work - and had no idea how much our ignorance was contributing to problems for our own clients' ...... was the summary I've always remembered from one of their senior people.

Your own contributions significantly mirror that. For example why tell the OP to get their Bank to put a trace on the payment - when they have already advised they have the cleared cheque! The crossing stamp on the front and the audit trail on the reverse is all that is needed. Plus, of course, the basic acumen of any accountant in ensuring this goes to the Accounts Office as a query - where they do all the processing and therefore have the real expertise in tracing payments, particularly those via cheque, in minutes.

chrismac1

"HMRC have known about this since the end of November and are still unable to locate it."

If all at HMRC towers is hunky dory, explain this statement and the hundreds like it we get on here.

Mikeyorks

chrismac1 wrote: »

"HMRC have known about this since the end of November and are still unable to locate it."

If all at HMRC towers is hunky dory, explain this statement and the hundreds like it we get on here.

As clearly stated (in partial response to the fact the Accountant had been dealing with it) :

Plus, of course, the basic acumen of any accountant in ensuring this goes to the Accounts Office as a query - where they do all the processing and therefore have the real expertise in tracing payments, particularly those via cheque, in minutes.

As one would assume that, following the years of experience most claim, a modicum of working knowledge would eventually rub off? Or is it still murky that all payments (CHAPS, cheques, BACS, FP, DD et al) are processed at the AOs. Who have all the tools / experience to trace.

4Chickens

My accoutant called last week and HMRC tell her that they have tried to track this payment twice and cannot locate it in their bank accounts.

I called a lovely lady at HMRC and faxed her a copy of the front and back of the cheque along with a copy of the bank statemtment showing the cheque was cashed

I also spoke to the business section at our bank and they put me through to the fraud team. The fraud team are going to see if they can identify the account that has been credited. They said it might take a few days and it wouldn't necessarily gives us the answer we need.

Now, on the back of the cheque there are many numbers and there is a 10 digit number 6700018991 but there is no 'K'.
On the front of the cheque it has been stamped 515049UNP(S)

Not much of an update, but I am not a very good Miss Marple. We shall see if HMRC and/or our bank can solve the mystery.

Any other ideas?

Pennywise

All you can do is persevere and keep phoning/writing to them about it, every time you write send a copy of all documents, including the cheque. Eventually you'll come across someone who has the ability/capacity to deal with it.

I had a similar case with a client of mine a couple of years ago. No doubt that the tax had been paid, we also had a copy of the cleared cheque, but it took well over a year of ringing/writing and lots of initial helpful responses, but every time it went quiet after first contact, never to be heard from again.

The client had to fend off the debt collectors and bailiff threats as the accounts office didn't even put a "stop" on collection despite our requests to them, and the debt collectors simply ignored our protests and copies of the cleared cheque.

Eventually we managed to get one of the AO staff to take it seriously and escalate it properly, and lo and behold, they "found" the payment, but it was one hell of a struggle and very anxious time for the client. Sadly, it seems there are still too many staff within HMRC who either don't know or don't care!

chrismac1

I had exactly the same experience with Pennywise in the case of the PAYE cheques which went astray. After about 5 months I was getting calls from the client saying HMRC were sending in the bailiffs and so on, this will not strictly have been true it will have been a call putting on the frighteners and mentioning the bailiffs. My client is 66 and not in great health so just got really stressed.

Here is how I solved the credit control issue stone dead - I raised a formal COMPLAINT CASE documenting all the times we'd sent money and all the times we'd told HMRC it had been wrongly allocated. Now I very much hope your case is sorted quickly without debt collection being involved. But just in case, the Complaint option is well worth considering a few months down the line. It's about the only time HMRC take you seriously, and I also notched up £250 in compensation for the extra letters and calls I'd made for my client.