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BS: Latest HMRC fiasco!

Bonzo3legs 09 Sep 10 - 09:35 AM
Bonzo3legs 10 Sep 10 - 08:08 AM
Leadfingers 11 Sep 10 - 05:08 AM
Bonzo3legs 11 Sep 10 - 08:04 AM
romanyman 11 Sep 10 - 01:59 PM
Bonzo3legs 11 Sep 10 - 02:45 PM
Bonzo3legs 12 Sep 10 - 07:30 AM
Liz the Squeak 13 Sep 10 - 06:24 AM
Bonzo3legs 13 Sep 10 - 02:06 PM
Dave MacKenzie 13 Sep 10 - 04:58 PM
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Subject: BS: Latest HMRC fiasco!
From: Bonzo3legs
Date: 09 Sep 10 - 09:35 AM

It has been widely reported that HMRC's new PAYE computer has calculated that some six million people have underpaid £3 billion in PAYE. This is a special summary for advisers.

HMRC will be issuing tax calculations show underpayments of on average £1,400 but some may be as high as £5,000 from today. Due to the number of taxpayers who pay tax under PAYE, most are unrepresented by tax advisers.

We have here a summary of the guidance given by a combination of Robin Williams of the Low Income Tax Reform Group (LITRG), and John Whiting of the Chartered Institute of Taxation, together with relevant deadlines and concessions that apply for PAYE and NICs underpayments and overpayments following HMRC's new Powers and Penalties regime. Scroll to the bottom for direct links to LITRG.

What to do if HMRC has written to you

Don't panic, you have not been sent a demand it is a calculation.
If you have underpaid tax, it will generally be collected next year via your tax code.
Read through the figures on the calculations and check to ensure that the basic data is correct
Were you in receipt of PAYE benefits in kind in that year (a car or van perhaps, is the make and model and dates it was available correct)?
Are the income or pension totals correct for each year?
Go back to any records or correspondence you have kept in relation to your PAYE coding noties.
If you find any errors or mistake, you need to write and inform HMRC.
If you agree the figures you do not need to take any further action, and HMRC will automatically make the adjustment via your PAYE coding.
PAYE underpayments

You need to establish the cause of the underpayment:

Did your employer operate an incorrect tax code? If so the underpayment is his problem not yours.
Were you resonably sure that you were paying the right amount of tax at the time, but it is clear that HMRC had not used the information available to it at the time and given you the wrong tax code? If so the underpayment is HMRC's problem and not yours, see Extra Statutory Concession A19 below.
Check which years are being recalculated to ensure that all all are "in time".
PAYE overpayments

If HMRC informs you that you have overpaid PAYE you will still need to check that this is correct. You will face a tax penalty if you notice an error and do not point it out or if you fail to disclose any income and this results in a higher refund than would otherwise become entitled to.

PAYE underpayments and those who were on state benefits
If in a year in which you have underpaid PAYE you were entitled to state benefits then the chances are that you have been underpaid benefits as a consequence (these are calculated on net income, after tax). John Whiting points out that the two should balance each other out, but as you cannot backdate benefits there is an issue here. He indicates that he hopes HMRC will come to an equitable solution in the circumstances.

Key points to look out for:

Time limits for PAYE

The time limits for assessment and claims have changed:

From 1 April 2010, HMRC cannot go back further than four years unless there is evidence of careless behaviour by the taxpayer.
Where there is carelessness it can go back six years, and up to twenty years if there is deliberate default.

Underpayment: HMRC delay ESC A19

Underpaid tax will not be due if the underpayment was caused by HMRC not acting on information that it was given to adjust a tax coding within a set time frame of 12 months following the end of the tax year, this is acccording to Extra Statutory Concession A19.


Overpayment: taxpayer error

Overpayment Relief replaces error or mistake relief from 1 April 2010:

Claims must be made within 4 years of the end of the tax year or accounting period to which the claim relates.
This time limit does not apply where the claim relates to a mistake in an individual's 2004-05 or 2005-06 self-assessment return if they were not given a notice to make the return within 12 months of the end of the tax year. The time limits for claims in these cases are 31 January 2011 and 31 January 2012 respectively


NICs refund limits and deadlines

There is no deadline for reclaiming excess contributions where, for example, you had two jobs or were both employed and self-employed.
If you have overpaid or wrongly paid for any other reason, there is normally a six-year time limit for claiming a refund. So, for example, a claim for the tax year 2004-05 must be made by 5 April 2011.
See: http://www.hmrc.gov.uk/ni/refunds-complaints/claimback.htm

So no need to panic - just laugh at the shambles caused by the Blair/Brown governments!


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Subject: RE: BS: Latest HMRC fiasco!
From: Bonzo3legs
Date: 10 Sep 10 - 08:08 AM

It may affect you!!


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Subject: RE: BS: Latest HMRC fiasco!
From: Leadfingers
Date: 11 Sep 10 - 05:08 AM

And one of the 'Top Men' at HMRC says he sees no reasoin to apologise for the mess !
Bank of England Interest rate unchanged 0.5%- HMRC Interest if you dont pay up immediately is (I Think) about 4 %


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Subject: RE: BS: Latest HMRC fiasco!
From: Bonzo3legs
Date: 11 Sep 10 - 08:04 AM

The key paragraph is this:

"Underpaid tax will not be due if the underpayment was caused by HMRC not acting on information that it was given to adjust a tax coding within a set time frame of 12 months following the end of the tax year, this is acccording to Extra Statutory Concession A19."


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Subject: RE: BS: Latest HMRC fiasco!
From: romanyman
Date: 11 Sep 10 - 01:59 PM

Id love to see someone try to fight the bastards, I wonder who would win ?


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Subject: RE: BS: Latest HMRC fiasco!
From: Bonzo3legs
Date: 11 Sep 10 - 02:45 PM

Let's see, I understand that HMRC is currently opening post received in June and July 2010. Some will be thrown in the bin, and they have got rid of so many staff, that there is every chance that you will win. The staff left in call centres are at best thick and will record any information you provide over the telephone - if you can get through......you work it out!!! The word shambles comes to mind!!


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Subject: RE: BS: Latest HMRC fiasco!
From: Bonzo3legs
Date: 12 Sep 10 - 07:30 AM

As I've mentioned before - a good wheeze is to form a company, don't pay the corporation tax, don't file any annual return or company accounts. Companies House will send all manner of threatening notices which you ignore, after which the company will be struck off. This is a good way of using the shambles of a system - totally the fault of the Blair/Brown fiasco, to save one year's tax.


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Subject: RE: BS: Latest HMRC fiasco!
From: Liz the Squeak
Date: 13 Sep 10 - 06:24 AM

Ah Bonzo - that's fine if you don't trade - if you do trade, or claim grants for equipment etc, you will be chased. Do not make the error of mistaking Corporation Tax for PAYE. They are two separate animals and are ajudicated differently.

And I object to your calling HMRC staff 'thick'. They are under a great deal of pressure through no fault of their own and the ruder you are to them, the more likely they are refuse to deal with you.

LTS


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Subject: RE: BS: Latest HMRC fiasco!
From: Bonzo3legs
Date: 13 Sep 10 - 02:06 PM

It only relates to a limited company.

In the unlikely event of speaking to someone at HMRC who's accent can be understood - I regularly speak to Scottish and Belfast accents which are often impossible!!


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Subject: RE: BS: Latest HMRC fiasco!
From: Dave MacKenzie
Date: 13 Sep 10 - 04:58 PM

Blair and Brown just finished off the job begun by Thatcher.


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