Potential underpayment

Potential underpayment

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A potential underpayment of £1,803 relating to 99/00 was coded out by I Rev during the 2000/1 tax year. However, the SAR for that year (2000/1) did not include the pot u/p at box 18.1 and consequently the tax shown as being due for that year was £1,803 too little. This was never picked up by IR at the time. Meanwhile client dies in July 2003. Now IR are wanting their £1,803 back.
Question. Can IR do this ? Is this not effectively an enquiry into the 2000/1 SAR (the fact that 18.1 was not completed as it should have been) or do the tax calculation bits of the SAR not count for this purpose?
Ian Riley

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By AnonymousUser
27th Oct 2005 18:01

Interesting one
Not sure, but I would have thought Revenue within their rights to pursue the tax. I don't think there is an enquiry issue as Box 18.1, although included in the return, really is as you say part of the calculation only. Given that completion of these boxes is optional (strictly only if submitted before 30 Sep but I have seen plenty taxpayers completing their own returns after 30/9 and leaving the calculation to the Revenue) non-completion of these boxes would not IMO constitute an incomplete or incorrect return. If everything else was correct then all we have is a straightforward underpayment of tax.

Although there is no rule of equity in tax law, it sometimes helps to look at it from the other side. If you discovered that the return in question had overcharged your client to tax, because of a similar omission in Box 18.2 I am sure you would be pressing for a repayment.

What would have happened if Revenue had not spotted the omission? Given that there is no question that the taxpayer underpaid tax, and PRs are responsible for discharging all liabilities arising during lifetime, would failure to pay over the sums not amount to theft on their part?

Only course of action I suggest is to look at possible remission because of Revenue error - could you argue that because they had already made the coding adjustment they had all necessary information in order to calculate/check the liability? I think there would be a case only if the taxpayer was unrepresented and had asked Revenue to calculate the tax.

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