Help with Tax - HMRC no use whatsoever

jimmo

Mikeyorks wrote: »

But I've been suspecting for a little while that the issue of P800s (since the new PAYE system came in 3 years ago) is giving the impression that these notional underpayments are real ones.

You may be interested in the First Tier Tribunal decision given in May 2011.




http://www.financeandtaxtribunals.gov.uk/Aspx/view.aspx?id=5531

I can’t find anything to say the case has progressed since then but maybe its early days yet..

Mikeyorks

jimmo wrote: »

You may be interested in the First Tier Tribunal decision given in May 2011.

Oh gosh - what a nice read just before bedtime!

Now I know why my cousin - a circuit Judge - always looks and sounds sombre.

John_Pierpoint

Even chrismac1 cannot make up this sort of thing:

[FONT=&quot]Mr Clark received fourteen separate notices of coding in the period from 17 January 2010 to 22 March 2010. Of these, three relate to 2009-10 and the rest to 2010-11. In addition, he received a Tax Calculation Notice dated 24 November 2010, in respect of the tax year 2009-10. [/FONT]

jimmo

I hope I am not trying to teach my grandmother to suck eggs here but I think you need to break down your problem into manageable segments e.g.

1) HMRC say you owe tax.

Are they correct? If you have a company car it is, quite frankly, very likely that you do owe tax but have they got the figures right?

When it comes to car benefits, HMRC rely entirely on figures reported to them by your employer on forms P11D. Did your employer get the figures correct?

If your employer put incorrect figures on your P11D your argument will, in the first instance, be with your employer not HMRC.

2) Once you are satisfied that HMRC have got the amount tax you have underpaid correct you can start addressing the question of why the underpayment arose. Did anyone mess up? If so, who? Was it HMRC, your employer or you?

3) How is the underpayment to be cleared?

Should HMRC write it off because of their own incompetence?

Should your employer pay it off because of their incompetence?

Will you have to stump up? If so, can you pay up or will you need time to pay?

You have already posted more details about your income etc than I would be comfortable disclosing about myself on a forum but, certainly for me, there are still gaps that need to be filled but it can be done.

So, back to point 1.

How much do HMRC currently claim that you owe?

Do you understand and agree their figures?

jrd

Thanks for repyling Jimmo.

In answer to your question.....that's what I don't know!

As far as I can tell the numbers provided by HMRC simply don't match up; all I've asked them do is to clarify what the alleged underpayment relates to.

I've had a company car for 12 years, and a reduced rate mortgage for 15 years, and never previously had a problem.

In 2010-11 I was informed of an underpayment relating to the previous tax year, which was then subsequently collected in the remainder of that tax year and this tax year - this tax year is also seeing me repay an assumed underpayment from 2010/11 plus the adjustment to reflect the changes for the existing tax year.

All I want is for HMRC to let me know:

Tax year "underpayment" by year
Has any of it been collected in this and previous tax years?
What will the position be as at April 6th 2012?

You'd have thought they would be able to tell me this over the phone - unfortunately I have to write in to request the information.

I believe there is no underpayment - the underpayment identified 16 months ago and collected through PAYE is correct.

Thanks

JRD

I can only assume they've recently applied the incorrect 2009/10 P11d (presumably supplied in June 2010 - so applied 20 months after receipt), and will shortly be applying the correct P11d information as they play catch up. The reason the 2010/11 underpayment exists is because they've assumed a similar (incorrect) return on that years P11d information.

jimmo

Can we try a different approach?

In post #1 you gave the details from the 2010/11 P800 and mikeyorks has correctly calculated your liability for the year as £16,270.

In post #4 you say you have had P800s for 2008/09 and 2009/10.

Would you provide the details along the lines of post#1 so that one of us can calculate your liability for each year?

What isn’t making sense to me at present is that you appear to have an underpayment of £1240.16 for 2008/09 and exactly the same for 2009/10.

I would normally expect that to mean that you had an accumulated underpayment of £1240.16 at 5 April 2010 but it is possible that the accumulated underpayment is £2480.32.

That, to me, would be strange but, either way, we are nowhere near the figure of £3342.61 which you say appears in the 2010/11 P800.

If we can sort this out first then I think those of us who think we know a thing or two about tax can start to make a bit of sense out of this but I’m afraid you may need to be patient with us.

chrismac1

Another possibility you may not have considered, but which has cropped up with 2 clients adn at least 3 posters on this site, is the following:

1. They correctly calculate an underpayment for a given tax year, for example 09-10.
2. This amount is then added on as an adjustment for 10-11.
3. Hence 10-11 underpayment is overstated by that amount, overall impact is to double the declared underpayment.

We're speculating. There are a number of ways in which HMRC could be wrong, and always the odd chance they've got it right! Either way they owe it to you to show how their numbers have been arrived at, and you owe it to yourself to pay nothing until you understand it and agree it.

Mikeyorks

chrismac1 wrote: »

1. They correctly calculate an underpayment for a given tax year, for example 09-10.
2. This amount is then added on as an adjustment for 10-11.
3. Hence 10-11 underpayment is overstated by that amount, overall impact is to double the declared underpayment.

So you're no more au fait with P800s than you are with ESC A19?

As it clearly says on the Notes - where P800s for more than one year are issued together - the under / over payment for the 1st year is 'adjusted' on to the next year. And so on. The net effect being that the final P800, in the series, has the aggregate under payment owed - or the aggregate overpayment being refunded. Fairly bog standard accounting I would say?

It would only 'double the underpayment' if the 2nd year payment was precisely the same as the 1st. Which it was not - in this case.

Another possibility you may not have considered

........ covered fairly obviously at post #2. And in even more detail at the start of #6!

John_Pierpoint

It might be pretty obvious from the HMRC insider's perspective, and even the regular account/self assessment tax payer get a feel for it, but the average "man in the street" payer finds the running total very confusing.

Now let us have a discussion about the resulting "K" code on the notice of coding.

The system really was not designed to get years behind with collecting the correct tax.

chrismac1

"As it clearly says on the Notes - where P800s for more than one year are issued together - the under / over payment for the 1st year is 'adjusted' on to the next year. And so on. The net effect being that the final P800, in the series, has the aggregate under payment owed - or the aggregate overpayment being refunded. Fairly bog standard accounting I would say?"

I have written confirmation on two separate clients that they doubled the tax bill in error. HMRC corrected their calculations with no apology for the errors. As you say, it is bog standard accounting and the HMRC computer got stuck in the bog!