Late Tax Calculation Fairness

BillyBarker

On Saturday I received my tax calculation for 2010/11. Nothing wrong with the calculation as far as I can see but there is a significant amount of tax due.
· I submitted my paper tax return on time, before October 2011 so that HMRC would do the calculation for me.
· I indicated that I wanted any tax due collected through my tax code.
· The amount due, whilst significant to me, is less than the £2000 limit for this.
The letter accompanying the calculation tells me that I should have paid the tax (that I didn’t know was due up until now) by 31 January 2012 and because I have missed the deadline interest and surcharges will be applied.
Today I phoned HMRC and after 4 minutes of recorded messages got through to a real person. He told me that it is now too late to collect the tax through PAYE and interest at 3% had indeed been applied.
Now it doesn’t seem very fair to me that because HMRC have taken 18 months to process my tax return that a) I have missed the opportunity to have the amount owing collected through my tax code and b) I have been charged interest for not paying the amount they have just told me I owe over a year ago.
Do I just have to accept this is how it works nowadays?

John_Pierpoint

How come it has taken 15 months for you to realise that HMRC has not processed your return; or to be more accurately, when did they process your return and how come you did not realise?

I had a similar experience, but by the time it was all sorted out I had entered an appeal against the £100 penalty and written 4 un acknowledged letters in effect saying "what are you playing at" before spending 24 hours getting through to HMRC and having to wait 36 hours to get a call back. "They don't accept incoming calls" [from plebs like you?] according to the triage call centre operative.

In my case my return had indeed been processed, but I was not told. In my case HMRC decided I was owed a small refund, but failed to tell the self assessment account. This in turn decided I had failed to make a payment on account in time and issued the penalty.

In my opinion the whole mess was caused by HMRC reorganisation, so when the penalties were cancelled I left it alone.

BillyBarker

John_Pierpoint wrote: »

How come it has taken 15 months for you to realise that HMRC has not processed your return; or to be more accurately, when did they process your return and how come you did not realise?

I always get my paper returns in on time. I have never actively checked whether they have been processed or not and I wouldn't know how to.
At some point they obviously are processed and I either get a refund or a change to my tax code. On this occasion the tax calculation was the first communication I have had since submitting the return so I presume the processing was done shortly before it was issued.
I am sorry to hear about your bad experiences.

John_Pierpoint

What have you actually received to notify you of your liability?
Could previous documents have been "lost in the post" ?
Did you give consideration to getting on-line access so you could check your account account, if not to do the return on-line as well.
[it is off topic but it is much easier and you get a chance to play "what if" games and know your liability instantly, when you do it on-line. However certain attributes of your personal circumstances may forbid you from using HMRC's on-line system.]

Are you simply being charged interest (how much in £'s?) or are HMRC trying to slap-on penalties too ?

BillyBarker

The only communication I have received is the Self Assessment - Tax Calculation (SA302). I assume that this is the first notification of my liability and that no previous documents have been lost in the post.
I am not registered online, nor do I particularly want to be. I would say that my tax affairs are slightly more complicated than average and it suits me to fill out a paper return and ask HMRC to calculate for me. This has previously worked well and there is usually just a modest under or overpayment required.
Although the letter states that "interest and surcharges will be charged", according to the person I spoke to yesterday only interest (a year and a bit's worth) has been applied so far.

John_Pierpoint

Well I suppose you have had the use of the money (though I doubt you earned 3% tax free on it) so if it is a modest sum I would pay it. (based on the "life is too short" principle).
I started using the on-line system nearly 10 years ago, it is not what I would call a quality IT design. However it does have its limitations and I have had to drop out back to the paper system twice:
Accidental Foreign income as a result of a company take over (even the company registrar got the tax treatment of that wrong).
Recipient of trust income (during the probate machinations of my late uncle).

I prefer the certainty of the processing of the tax return on-line and the instant tax liability calculation, though as you have probably realised it takes a daily (?) batch process to get the calculation updated onto your tax liability account's statement. (which can be viewed and paid on-line even if the return was done on paper).
Come April a lot more companies are going to be forced to make current month computer returns [some on here are awaiting the train wreck] - so I would expect you to be eventually forced to make an electronic return.

BillyBarker

If HMRC had done the calculation within a reasonable time of me submitting my return I would be paying off the amount due through this year's tax code and I would not have been charged interest.
However, as you say, it seems that I will have to chalk it up to experience and move on. And, yes, I should bite the bullet and get myself online.
Thank you very much for your replies.

BillyBarker

Having been told that just interest and no penalties had been applied, bitten the bullet and paid the amount outstanding plus interest, today I have received a list of penalties for paying late:

5% for being 30 days late
5% for being 6 months late and
5% for being 12 months late

So having submitted my 2011 return on time, I have now been charged the best part of £200 just because HMRC took 18 months to process it.

I am not very happy about this!

John_Pierpoint

As push seems to have come to shove - Can you demonstrate that you did indeed submit you manual tax return before the October deadline ?
I used to take my manual one to the local tax advice centre and demand a signature or stamp on the official looking "courier" receipt.
Then that was replaced by one woman and a telephone, and I had to make do with a certificate of posting. There was one year when the whole bundle was returned to me after Xmas, because I gad written a letter explaining that though I had disposed of an asset worth more than 4X the nil rate band for Capital Gains Tax, I still did not owe any CGT.
When I protested I was in effect told to fill in the !!!! form. However I was not fined or penalised; that was in the days when you could not be fined more than the unpaid tax and I actually qualified for a small repayment.

So if you can reasonably demonstrate you were blameless, I would challenge the fine. Did you get any paperwork telling you how to do this ?

I had a similar s c r e w up and reclaimed the £100 penalty.

BillyBarker

Thank you again John. Yes my tax return was submitted on time and this at least is not being disputed otherwise I would have late submission penalties in addition to those for late payment.
The penalty notice also included the appeal form so I will be sending that off today.
I think the problem lies in the automated systems. I imagine when my tax was calculated in February and the amount owing entered the system said this was due a year last January and automatically added interest. Then when I made the payment the system said this payment was made late and automatically sent out the penalties.
Hopefully the appeal will be read by a real person!

John_Pierpoint

I had a similar problem, when submitting a paper tax return after being told I could submit it on-line; only to have my application for a password rejected (BY EMAIL for those who think any email from HMRC is a scam) but the system churned out the penalty regardless.

It took a lot of effort to get what I thought needed to be said onto the form, so try to remember the ABC (Accurate Brief and Clear) however much you feel like having a good rant.:D