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Refunds of PAYE from past tax years

Client is usually a bit forgetful and over the years underpays/overpays PAYE until at the end of the year he's overpaid. Overpayments got lost in the mist of time as brought forward figures were impossible to reconcile and I don't do the payroll and the payroll people themselves don't keep an eye on him, unsurprisingly.

I finally realised he was not being refunded around £800 this year and because I'm not the payroll agent I told him to ring HMRC. They have written to him agreeing that have several years worth of overpayments from him but want a full explanation as to how the overpayments arose. They seem to doubt that the P35's concerned are correct. Of course they are correct. I drafted a reply for him stating that as a busy business person things got overlooked and when he caught up, he double paid. His letter is apparently not detailed enough and they now require him to explain for each month that was overpaid in 2006/7 and last year exactly what happened.

This could take hours and hours of his time and mine and I am keen to avoid it. It seems a glorious excuse for HMRC to hang on to the money. Should he complain to the next level up or will he get absolutely nowhere?


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23rd Nov 2011 18:20

His fault

Why should it take too long?

You list what should be paid and list what was paid. Any duplicates or differences can be given the same reason - a "busy" person!

Many clients dont take their responsibilities seriously and deserve all the extra grief they get.

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By chatman
23rd Nov 2011 23:10

Can't see they have a leg to stand on

Even  if you tell them exactly which payments were made and when, you would still need to explain why the client got it wrong, and then they could still say they don't accept your application. 

I cannot see how they have any right to do this.  I would go straight to the Tribunal.

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24th Nov 2011 06:48

I had this a while ago

I spoke to HMRC on a similar theme a year or two ago and the person I spoke to told me they had to make these checks because they must make sure they are not repaying employee's money.  The moment you pay money to the PAYE department they consider that this is the employee's deductions and that is that, so getting a refund is always going to be difficult.

The more i hear about the PAYE system the more I realise that their computer is a pile of xxxx.  I think it came out of the ark and it basically doesn't tell them anything at all.  They struggle to get a schedule of payments made out of their own system, which is appalling.

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24th Nov 2011 09:56

Thanks for the comments

I think from what's been said that we will have to bite the bullet and trot out some silly explanation about why the client overpaid in month 7 etc... I don't know his state of mind for a particular month several years ago, and I'm sure he doesn't.

My client won't want to go to the Tribunal, as he will think it is dangerous to put his head above the parapet. He is an honest hardworking person who doesn't have a secretary to keep him in check and like many of my other clients gets distracted by the 101 things traders have to do to keep their businesses afloat.

I know there are plenty of businesses who deliberately don't pay on time, etc, but as one who overpays, he can hardly be in this category! I think Taxhound's explanation of HMRC's mindset is very interesting and I will explain this to the client, whilst insisting that he gets his payments in line with what is actually due from now on.

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24th Nov 2011 10:29

Their own fault

"gets distracted by the 101 things traders have to do to keep their businesses afloat."

One of the things that makes business life easier to deal with the other issues is to deal with HMRC and Companies House in a responsible manner. Clients have customers who keep a check on them but clients only have their accountants who don't usually get involved at that level. Clients don't like paying accountants £100's or £1,000s when a few minutes consideration would make it unnecessary.

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