HMRC Investigation time limit

[Deleted User]

Dazed_and_C0nfused said:

chutney51 said:

Hoeing, Did you read my post? 

"You had no qualms about keeping quiet about the underpayment of tax though. How did it arise? Must be pretty apparent."

She declared ALL income back in 2022 by her self assess form. She received a letter saying all good, here's an £18 refund. She didn't know there was an underpayment. She paid tax on the normal pension and tax on the SIPP money. At no point did she know there was an underpayment until January this year.
HMRC knew about her income from her tax return AND the info from the SIPP provider.

Why do you make assumptions like that?

So if she declared all income what is it you think can mean HMRC believe there is extra tax to pay?

Did she claim some relief she wasn't entitled to?

Something doesn't make sense here as £12,000 is a significant amount to owe from a HMRC enquiry (if it does turn out to be owed).

I agree. I am not sure that matters can be progressed without seeing a breakdown of the calculation.

noitsnotme

Sounds like she may have completed the self assessment incorrectly.  And now HMRC have looked in to it they have discovered the mistake(s).

chutney51

Thanks Dazed. You ask:

"So if she declared all income what is it you think can mean HMRC believe there is extra tax to pay?"

It appears the SIPP provider charged tax at 20% on the £83k. It was in 3 different payments with 3 different tax codes. (Bearing in mind her normal pension was already paying 20% and using up her tax allowance for the year.) Obviously she was now into the 40% bracket, hence the extra tax that should have been paid now being chased by HMRC. She did pay about £17k in tax for the SIPP money. To her, having been PAYE and low tax bracket for 35 years, that was an enormous amount of tax.

"Did she claim some relief she wasn't entitled to?"

No. She had 2 incomes for the year - her regular pension and the SIPP withdrawal (taxed by the SIPP provider). Also about £20 in interest from a bank account. Remember interest was virtually zero from banks at the time.

The point I keep needing to stress is that HMRC had all this info back in 2022 from her self assess form. Nothing has changed. They are suggesting they have new info, but its the same numbers.

Dazed_and_C0nfused

chutney51 said:

Thanks Dazed. You ask:

"So if she declared all income what is it you think can mean HMRC believe there is extra tax to pay?"

It appears the SIPP provider charged tax at 20% on the £83k. It was in 3 different payments with 3 different tax codes. (Bearing in mind her normal pension was already paying 20% and using up her tax allowance for the year.) Obviously she was now into the 40% bracket, hence the extra tax that should have been paid now being chased by HMRC. She did pay about £17k in tax for the SIPP money. To her, having been PAYE and low tax bracket for 35 years, that was an enormous amount of tax.

"Did she claim some relief she wasn't entitled to?"

No. She had 2 incomes for the year - her regular pension and the SIPP withdrawal (taxed by the SIPP provider). Also about £20 in interest from a bank account. Remember interest was virtually zero from banks at the time.

The point I keep needing to stress is that HMRC had all this info back in 2022 from her self assess form. Nothing has changed. They are suggesting they have new info, but its the same numbers.

Sorry but that simply doesn't make sense.

A Self Assessment return is for her to declare all her taxable income so if she did that then her Self Assessment calculation would show the correct tax liability.

It really does seem like you are missing some key information here or are being selective with what you are telling us.

noitsnotme

chutney51 said:

Thanks Dazed. You ask:

"So if she declared all income what is it you think can mean HMRC believe there is extra tax to pay?"

It appears the SIPP provider charged tax at 20% on the £83k. It was in 3 different payments with 3 different tax codes. (Bearing in mind her normal pension was already paying 20% and using up her tax allowance for the year.) Obviously she was now into the 40% bracket, hence the extra tax that should have been paid now being chased by HMRC. She did pay about £17k in tax for the SIPP money. To her, having been PAYE and low tax bracket for 35 years, that was an enormous amount of tax.

"Did she claim some relief she wasn't entitled to?"

No. She had 2 incomes for the year - her regular pension and the SIPP withdrawal (taxed by the SIPP provider). Also about £20 in interest from a bank account. Remember interest was virtually zero from banks at the time.

The point I keep needing to stress is that HMRC had all this info back in 2022 from her self assess form. Nothing has changed. They are suggesting they have new info, but it’s the same numbers.

If she had completed the online self assessment correctly showing all the income and all the tax paid, at the end of the self assessment it would have automatically calculated and shown the extra tax to pay.  The fact that it calculated a small refund was due can only mean the self assessment wasn’t completed correctly.

chutney51

Again, she put down ALL her income on the SA form in 2022. I watched her do it. The income from her normal pension, the extra income from her SIPP being cashed in, and even a couple of quid interest from bank accounts. 

My beef with HMRC is they say they have new information. They dont.

I wish we had done it on paper and photocopied it, or taken screenshots. Live and learn.

MattMattMattUK

chutney51 said:

Again, she put down ALL her income on the SA form in 2022. I watched her do it. The income from her normal pension, the extra income from her SIPP being cashed in, and even a couple of quid interest from bank accounts. 

You should be able to download what was submitted, it would also show the tax calculation, can you confirm what was actually inputted and what the calculation was? 

chutney51 said:

My beef with HMRC is they say they have new information. They dont.

My suspicion is that the SA was completed incorrectly, that meant the calculation was incorrect. The "further information" is HMRC matching the data received from the pension provider with the tax return, which now shows a discrepancy. 

chutney51 said:

I wish we had done it on paper and photocopied it, or taken screenshots. Live and learn.

All online SAs are stored and you can download a copy of what was submitted in PDF format. 

[Deleted User]

If all personal allowances were utilised at the regular pension, and an entry was made showing only 20% tax deduction on an £83k taxable SIPP withdrawal, the calculation would not have shown a refund of £18, rather a sizeable underpayment. 

I really don’t understand the acceptance of the £18 refund while knowing that further tax was due. 

What exactly was entered on the return relevant to the SIPP?

Dazed_and_C0nfused

[Deleted User] said:

If all personal allowances were utilised at the regular pension, and an entry was made showing only 20% tax deduction on an £83k taxable SIPP withdrawal, the calculation would not have shown a refund of £18, rather a sizeable underpayment. 

I really don’t understand the acceptance of the £18 refund while knowing that further tax was due. 

What exactly was entered on the return relevant to the SIPP?

The op has either misunderstood what the Self in Self Assessment refers to or has been hoping to get away with something and it's come back to bite them.

Or there is something they are failing to get across in the posts they have previously made.

noitsnotme

chutney51 said:

Again, she put down ALL her income on the SA form in 2022. I watched her do it. The income from her normal pension, the extra income from her SIPP being cashed in, and even a couple of quid interest from bank accounts. 

My beef with HMRC is they say they have new information. They dont.

I wish we had done it on paper and photocopied it, or taken screenshots. Live and learn.

That really doesn’t make sense.  If there was tax due and the online self assessment had been completed correctly, it would have shown you the extra tax due at the end.  She must have missed something or put something in a wrong box.

As mentioned above by someone else, if she submitted it online she can access the completed self assessments for the last few years through her online tax account.