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Student Loans

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Unknown to us  a client has a student loan and her income for 2012/13 meant that she should have made a repayment. There was no tax liability for 2012/13. She has now been issued with  a late payment penalty. It seems to me that this is not correct because as far as I can see late payment penalties can only apply to tax or ni. This is not tax but rather HMRC are merely acting as agent for the student loan company. If anyone can point me to the correct legislation I would be obliged.

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By johngroganjga
23rd May 2014 13:18

How is it that her income for 2012/2013 was over the threshold to trigger student loan repayments but below the threshold to trigger an income tax liability?  I would have thought that the former threshold would have been higher than the latter.

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Replying to bigbear1997:
RLI
By lionofludesch
23rd May 2014 13:28

Happen .....

johngroganjga wrote:

How is it that her income for 2012/2013 was over the threshold to trigger student loan repayments but below the threshold to trigger an income tax liability?  I would have thought that the former threshold would have been higher than the latter.

No liability after deduction of tax at source, perhaps ?  Just guessing ....

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By The Innkeeper
23rd May 2014 13:22

dividend income

from her company that kept her within the basic rate band

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By johngroganjga
23rd May 2014 13:48

So there was a tax liability but it was only at 10%.

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By The Innkeeper
23rd May 2014 13:55

There was no return

liability payable

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By rogercampbell
23rd May 2014 14:08

Nothing SL or Tax due

I've seen this efore, but even more ridiculous...

In my case HMRC issued a penalty where my client had overpaid their student loan by 3p, but the client had advised he had fully repaid the loan (which I suppose is not incorrect).  However, as he had overpaid the loan the SL account was still 'active' and because of this SLC had not issued a closure notice to HMRC. HMRC suspended the penalty indefinitely on the basis that client would keep their affairs up to date / in order for the next 3 months.

I didn't like the fact there was even a suspended penalty on the client's record given, as you say, its not even tax and nothing was due, but the tax return was incorrect according to HMRC guidelines. Due to the time cost in involved in disputing the client accepted the suspended penalty. 

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RLI
By lionofludesch
23rd May 2014 14:19

Apology

I wouldn't have let that drop.

Thin end of the HMRC jackboot wedge.

I'd have demanded an apology and reimbursement of the client's fee.

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By stratty
23rd May 2014 14:23
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