Coding out of tax underpayments
As a practice we have recently seen a few cases where clients underpayments in their tax codes have been removed by HMRC and replaced on their statement of account with one month to pay.
In these cases HMRC have said that there is not enough income from which to collect the tax owing but this is not always correct.
In the latest case, we have had a letter back from HMRC stating "I am unable to code out the underpayment as requested as the PAYE system will not allow me to code out underpayments that would double your client's liability under PAYE". They then suggest our client (owing c£600) contacts Debt Management for time to pay.
Firstly, I do not understand HMRC's position here - is what they are saying correct?
Secondly, whilst all this is going on our client is being chased for the debt and (as she was worried) did ring HMRC to see if she could pay by instalments and they refused - this despite them originally coding out the tax owing (as they have done in the past) and then removing it!
I'm bewildered and frustrated (as usual when dealing with HMRC) and not quite sure what to say to the client next apart from arguing further with HMRC that if they don't reinstate the underpayment in the code that they must give her time to pay.
Any thoughts/advice please?
- Do most of you still use MS Office? 157 6
- Should I move back home away from my office? 404 9
- P60 or payslips? 17 1
- Property income in different capacities 61 1
- Scanners 113 2
- IHT dilemma 1,356 21
- Warning for freeagent accountants using payroll import 171 1
- IT advisory questions? 144 5
- Entrepreneurs Relief 782 44
- Has anyone else come across VAT account suspensions? 101 1
- Ceasing in membership of ATT 503 7
- Director Personal Bank Account in company's books 454 8
- Sage payroll alternatives 615 12
- More AE! 646 14
- Moneysoft and People's Pension 125 4
- PAYE 1,624 17
- UK company paying dividend to foreign shareholder 1,114 16
- Relevance of UK Residency 120 2
- VAT Tax Point - Overseas Purchase 119 3
- Invoice dispute 604 5
- Auto enrolment excuses 1,147
- Feedback on accounts production software for IFRS 792
- Add T&Cs to Sales Order in Sage 481
- Digita Hosted Software 316
- Credit where credit's due....... 261
- Director phone costs 222
- Buying goods in US and selling them to company in US 222
- General rule: Evidence that the customer is in business 196
- What to say to Tom, Dick and Harry... 179
- Flat rate VAT- other income calculation 147