Jobsworth?

Jobsworth?

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We have a client who commenced self employment in 2005-06. He is over pensionable age and therefore exempt from Class 2 NIC. In any case the profits were below the class 2 exception threshold.

HMRC had not been notifified of commencement of self employment, in consequence of which no SA file had been created and no S.8 notice to file had been served by HMRC on the taxpayer.

A repayment of tax arose for 2005-06. The profits of the business were covered by personal allowances and surplus personal allowances gave rise to an overpayment of PAYE tax.

So we filed a form R40.

HMRC have now rejected the form R40 and issued an SA return for completion. Do they have that authority? I thought the R40 is a statutory form.
Clint Westwood

Replies (8)

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By IanRiley
06th Jul 2007 12:50

Well..
Well there is a specific space on the R40 to enter self employment income and the accompanying notes mention that if the turnover is over £15,000 then accounts should be submitted too otherwise a three line set of acounts will do, so I don't see why this is not adequate for your purpose.

However, I suspect that the R40 is not a statutory form (it has no dire warnings about penalties for false entries and they can not enforce it's completion) so if they choose to issue a Self Assessment Return I suppose your client (or you)has no choice but to complete it because that is a statutory form

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By AnonymousUser
06th Jul 2007 15:00

Thank you Ian
I could not find the instructions that you refer to dedictated to the entering of self employment income on a form R40.
The form itself is here
http://www.hmrc.gov.uk/forms/r40.pdf
This is the 2006-07 form which apart from the OCR aspects is not appreciably different from the previous year. The only place on this form that I could find relevant to self employment is in box 7.4 "Other Income and benefits". The guidance notes, here:
http://www.hmrc.gov.uk/forms/r40notes.pdf
seem to make no specific reference to the reporting of self-employment income. The notes specific to box 7.4 make no reference, and a search on the text string "self" elicits no relevant hits, nor "15000" or "15,000".

As to whether the form R40 is not a statutory form, I am open to persuasion but have yet to be persuaded (that it is not). S.42 TMA 1970 allows a taxpayer to make a claim for repayment. Para 2(3), Schedule 1A TMA 1970 requires that the claim be made in a form specified by HMRC. I have not bothered to look to the statutory instruments but I would expect that a form R40 is specified somewhere in the SIs as the form required pursuant to Para 2(3) Sch 1A TMA 1970.

I agree that the form contains no dire warnings of the consequences of an incorrect claim. Nevertheless it does require a signed declaration of accuracy, and my understanding is that punitive consequences are available in the event of an excessive claim.

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By IanRiley
06th Jul 2007 15:33

Sorry..
The R40 I looked at was the substitue one that my tax software (Drummohr) produces and it is a completely different design the one you have linked to.
On mine there is a specific heading (box 5) entitled 'Social Security Benefits, Income from Property and all other income on which you have not paid tax'. On my software there are then 5 sub pages on which to enter soial security, Property, Rent a room, self employment and other.
Drummohr also provide the IR notes as a pdf file and these are again different to the ones you have mentioned but definately go into detail about how you should enter self employment income.

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By AnonymousUser
06th Jul 2007 17:08

R 40 does the R stand for Rant or Recovery
Start of rant

I sent in a form R40 for a student who had had three different part time jobs. I sent a covering letter with an appendix giving all the dates for the jobs and education in the year. I was then sent a form to fill in to give details of all the dates for the jobs and education in the year because only the total was shown on form R40. When I commented that the form R40 was the only downloadable form that I could find for a repayment, I was told that the form was not for those with employment income. That is not what it says on the form and anyone with an ounce of sense would have processed the form and given the repayment without building extra delay and causing a complaint because of some later failures. The net effect, HMRC had a complaint, my blood pressure built and the student had to wait an extra four months for the repayment of tax that was overpaid because the PAYE system cannot cope with the situation where someone has three concurrent part time jobs.

Rant over and now for the other side of the coin.

Submitting a form R40 for another student to another area produced an almost immediate and painfree repayment.

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By refs8
07th Jul 2007 22:19

R40
HMRC these days simply want to use no commonsense

Recently had a case where decided to fill a SA Tax return instead of an R40 to simply speed up a repayment to the client each year using FBI took six months to get a UTR and was told at one stage we never asked you to complete a tax return so you are not allowed to!

Interesting because failure to notfity is an offence yet here we weer trying to make matters work simply!

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By User deleted
08th Jul 2007 15:10

Interesting comment by Andrew
I too have a case (partnership) where no UTR issued (client said they had a letter from HMRC saying they hadn't issued a return and so didn't need to complete one (I'd sent in a partnership 64-8 and requested it) and on submitting a completed partnership return I was sent a letter saying I should't have submitted it because they hadn't issued a form but would kindly treat it as such if I didn't reply within 30 days. As I'm not sure I can make a polite reply to that I think I may just let the 30 days lapse and pointing out that they have a statutory obligation to make a return could cause more delays.

Why they are such jobsworths I don't know - can't they dedicate their time to processing returns and pursuing those trying to evade tax rather than writing such silly letters?

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By AnonymousUser
09th Jul 2007 12:06

Andrew/Rachel ...
I don't know if this has since been superseded but it may help:
http://www.hmrc.gov.uk/workingtogether/publications/wt-19.htm#3

See section
"Self Assessment - Response to an Unsolicited Return"

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By AnonymousUser
10th Jul 2007 13:00

In the interest of balance
R40 for the student went in last month. Repayment processed in just under a month with no questions about using R 40.

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