Underpayment of tax 2007/08

Abcynthia

Hi,

I'm just looking for some reassurance so I can stop worrying really!

End of last year (2011) I received a letter telling me I had an underpayment of tax of £402 for the years 2007/2008. I phoned them up and agreed to pay it back monthly over the next 2 years. The gentleman said I would receive a direct debit form to fill in and that would start the repayments. I put it to the back of my mind as I awaited the form.

The next letter I received informed me that because I had taken too long to deal with it I would have to go through self assessment. I never received the direct debit form?! I phoned them up and he said it was too late and I would have to do the self assessment. I have done this and received a letter the other day saying I now owe £411 and it is accruing interest! It says I need to phone them if I have issues paying or just to make the final payment on the slip provided. I will be phoning them tomorrow especially because my situation has worsened since the first letter arrived (I have now been left a single mum with no job!).

Will they still be likely to let me repay it in increments? I will explain my whole story because the main reason I'm in this mess is because they did not send the form they said they would! I would have made 3 or 4 repayments by now if they had just done that! I just can't stop worrying about it. Thank you for reading.

chrismac1

The chances are 80% plus that one of the two things will apply:

1. Yet another blunder from the HMRC stables - see footnote to all my posts. Some of these assessments they seem to make up, some of them they get one taxpayer confused with another, some they just add 2 plus 2 and get 6. There should be on your letter some sort of calculation as to how they arrived at that number - do you understand this? if not, post it up on here and let's see whether we can make sense of it or it's just HMRC made-up numbers etc.

2. The calculation is correct, but the reason it has arisen is down to either HMRC being utterly useless and taking ages over simple tasks, or an employer oy yours making an error. In this case you should be able to get them to write it off, it might take a few letters and several months but with enough pressure from you in the right areas they should toss their hand in.

See earlier threads from myself and posters like Pennywise, lots of people have come on here with similar posts and had success. Get ready for HMRC stooges coming into this thread to say "Give up, pay your tax, HMRC is brilliant." Just check the track records of the various posters if you want to separate fact from fiction.

Pennywise

You should definitely appeal. HMRC are in the wrong to put you into SA because they failed to send you the required DD form. You need to write to them to appeal, stating the facts, i.e. that you phoned them and they agreed to instalments and that the promised DD form never arrived. You also need to make a big point about being told that you "had to" complete an SA return by a tax official who seemed to ignore your perfectly valid protests that you hadn't been sent the promised DD form. You may get a rejection to the first letter(s) which is standard practice, but persevere and after their first rejection, ramp it up by marking the letter "Formal Complaint" addressed to the Customer Services Manager. Eventually someone more senior will deal with it and almost certainly will do the right thing and reinstate the instalment options.

When you first got the demand, did you consider whether ESC A19 would apply (plenty of threads on here and elsewhere on the web) as you may well be eligible for the amount to be written off if you can satisfy the A19 criteria. Again, you have to write in, and again, you'll almost certainly get fobbed off a few times, but if you persevere, you should get the tax written off, but only if the criteria are met.

Finally, you may get told that because it's now in SA that the ESC won't apply. This isn't true. It's HMRC who have transferred it to SA, so HMRC can take you out of SA again and should consider you for the ESC. Again, be persistent. Again, the first couple of people who deal with your request will probably just send a standard refusal letter (probably not even bothered reading your letter nor your file before doing so), so again, you may have to go down the "formal complaint" route, to get your letter onto a more senior official's desk who will look at it properly and give it proper consideration, with a high level of probability you will be successful (NB if the A19 criteria are met!).

Finally, there are some posters who frequent this site who work for HMRC and whose usual answer is "pay up" and quoting what they think are the law/rules. From relies to these and other forums (particularly UKbusinessforum) it seems that there are a lot of people who have persisted and been rewarded by the morally right result, i.e. write off! So don't be put off from trying and persisting.

System

Pennywise wrote: »

Finally, there are some posters who frequent this site who work for HMRC and whose usual answer is "pay up" and quoting what they think are the law/rules. From relies to these and other forums (particularly UKbusinessforum) it seems that there are a lot of people who have persisted and been rewarded by the morally right result, i.e. write off! So don't be put off from trying and persisting.

As someone who works for HMRC my advice to anyone receiving an underpayment calculation is to ask for a full written explanation of how the underpayment arose in the first place including details of actions taken or not taken by HMRC, the employer or the taxpayer.
After receiving that the taxpayer should be able to decide if they can appeal (in writing) under ESC-A19 or employer error. I would never advise anyone to pay up or make an arrangement to pay before at least finding out how the underpayment arose in the first place.
In any other situation in life surely anyone would query a bill they received that they weren't expecting before they agreed to pay it.

chrismac1

Well said Pam!

Pennywise

Pam17 wrote: »

As someone who works for HMRC my advice to anyone receiving an underpayment calculation is to ask for a full written explanation of how the underpayment arose in the first place including details of actions taken or not taken by HMRC, the employer or the taxpayer.
After receiving that the taxpayer should be able to decide if they can appeal (in writing) under ESC-A19 or employer error. I would never advise anyone to pay up or make an arrangement to pay before at least finding out how the underpayment arose in the first place.
In any other situation in life surely anyone would query a bill they received that they weren't expecting before they agreed to pay it.

Absolutely agree - well said!

Trouble is that all too often, such requests are ignored - either you get a standard reply which says nothing, or you get a standard reply referring you back to the P800 and accompanying notes, or may not get a reply at all. Very seldom will you actually get a comprehensive reply to the first or second requests, hence the need to be persistent and escalate to complaint after 2 or 3 attempts.