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?
- General tax book with planning 163 2
- Limited Company - Personal Bank Account 3,224 69
- 2013/14 failure to submit end of year submission 291 11
- Gift of property & improvements 123 2
- Error in past Corporate tax return 353 5
- VAT Invoice 152 4
- Company overdue but wants to be struck off 809 32
- IHT and Swiss Property 131 1
- Sale of house with planning permission - tax free? 225 3
- Flat rate Vat Scheme & Vat on wholesale production of Cakes and other deserts 197 7
- Vat code for journal entries of director's expenses 157 2
- Claiming VAT and missing receipts 460 10
- HMRC overreaching its powers -again against a small surveying firm? 381 8
- Help with tax codes on Sage 263 1
- Letting relief on property transferred to a spouse 190 6
- VAT code for invoice from not VAT registered company 259 4
- Accounting for a finance lease 168 4
- SA302's anyone?? 544 16
- A change from the old Q v NQ debate 1,649 41
- Renting for military reasons 197 2
- Skandia using wrong address 1,620
- Nil Rate Band Trust - index linked debt by way of charge over property 901
- International interest certificate 511
- NOVA 368
- Have we escaped Gift with Reservation of Benfit & Pre-owned asset charges? - Gift after benefit 299
- Management expenses for investment company 264
- Bonus Bonds 262
- tax on apprenticeship income 174
- Entertainer withholding tax in Australia 173
- P11D benefit received by widow 151