Do HMRC verify pension contributions?

Do HMRC verify pension contributions?

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My father has just realised he incorrectly classified his employers (gross) pension contributions as his own therefore qualifying for extra tax relief (he is a high rate payer) and the online SA form has calculated a refund for him. My question is does anyone know if this will  be picked up by HMRC? Do they track all pension contributions to SIPPS and other types of pensions and know the difference between employer and employee contributions, or do they just rely on the tax payer to get it right on their tax form?  He is going to wait until they contact him however I'm not sure how they would identify this error.  Any comments would be helpful

Replies (29)

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By duncanedwards
03rd May 2014 17:39

"He is going to wait until

"He is going to wait until they contact him".

Why?  If he has claimed relief he isn't entitled to, shouldn't he be correcting his return?

If it was accidental, it should be corrected as soon as possible.  If it isn't corrected, surely that is (illegal) tax evasion - or am I missing something?!

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By Tonykelly
03rd May 2014 18:04

yes, they do

tell him if he doesn't correct his tax return, he is likely to be jailed for fraud and tax evasion.

You will probably go down as well, as you are an accessory to the crime.

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By MDK45
03rd May 2014 18:57

Agree with duncanedwards, I doubt they check but why take the chance?

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By neleem patel
03rd May 2014 21:00

Thanks

LOL thanks for the humorous responses.  Anyone who has a stubborn old man for a dad will know where I am coming from.  He is convinced it is "all on the system" and they will ask him to correct it, so he is banking on that.

However getting back to the actual question -do they track individuals contributions, does anyone actually know?

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By johngroganjga
03rd May 2014 21:10

I am astonished at this question. What does the likelihood of being caught have to do with anything?

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By neleem patel
03rd May 2014 22:21

I'm astonished too...

I'm astonished too at the responses I am receiving. There appears to be a presumption something illegal will happen. The facts are that a man has made a genuine blatant error on his tax return which will get corrected, all I'm asking is will HMRC identify the error too? Can anyone answer this question instead of provide useless answers.  Please remember that not everyone is a tax cheating scumbag. 

 

If they do track pension contributions then we will wait for them to contact us

 

If they do not track pension contributions then we will correct it ourselves in our own time.

 

Just a general question guys nothing more nothing less.

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By johngroganjga
03rd May 2014 22:42

Your approach makes no sense. If HMRC identify the error and contact the taxpayer he will face prosecution. If the taxpayer corrects the error at the first opportunity all will be in order. So what is the best, and right, course of action for the taxpayer to take? Not difficult is it?

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By JimH
04th May 2014 09:40

Correcting errors
If it's a genuine error, why wouldn't he correct it?

He's in time for 2012/13 http://www.hmrc.gov.uk/sa/correct-repay.htm#1

Penalties are adjusted for HMRC perception of taxpayer culpability and behaviour - Taxaid give you a decent summary: http://taxaid.org.uk/guides/tax-returns/enquiries-and-other-problems-wit...

If you've come for comfort that putting his head in the sand will be fine, you won't find it from professionals who adhere to strict professional ethics and integrity.

Neleem, assuring him that HMRC put the responsibility on the taxpayer to get things right and correct errors - supported by a penalty system that rewards "good behaviour" with potential elimination of penalties - is the direction to take. If you advise him along these lines and he continues to favour concealing, you've done your best by him.

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By Paul D Utherone
04th May 2014 21:14

It is called SELF Assessment

after all.

He's self assessed himself wrongly an therefore needs to correct the error and the self assessment.

Point him at HMRC site "Penalties for errors on returns, payments and paperwork" and the potential penalties made worse if he leaves it for HMRC to discover & correct, so as noted in that section:

"For example:

if a penalty arises because of a lack of reasonable care, the penalty will be between 0 and 30 per cent of the extra tax dueif the error is deliberate, the penalty will be between 20 and 70 per cent of the extra tax dueif the error is deliberate and concealed, the penalty will be between 30 and 70 per cent of the extra tax due

The penalty can be reduced if you or your client tells HMRC about the error. HMRC may make further reductions depending on the quality of the disclosure. Penalties can be reduced by:

telling HMRC about the errorshelping HMRC work out what extra tax is duegiving HMRC access to check the figures"

Realise the error, tell HMRC, correct the return and pay the additional tax and you would hope to push the 0-30% penalty down towards 0%

Leave it for HMRC to find and it will cost him 30% of the additional tax on top.

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By Alastair Johnston
05th May 2014 10:19

The short answer ...
... is no they do not.

But the long answers are all correct.

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By neleem patel
05th May 2014 20:53

Thanks Alastair Johnston
Alastair Johnston, many thanks for answering the question.

All the other 'answers' are not correct because they are answering a question that was never asked.

The accounting profession comes in for much criticism at times and I think the above responses go someway into explaining why.

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Locutus of Borg
By Locutus
05th May 2014 22:13

People don't always ask what they really mean

In my experience, people don't always ask exactly what they mean, particularly if they think they may have done the wrong thing.  This is often just human nature, I suppose.

I must admit, they way that you had phrased your question, I wondered whether the real question behind it was "My father made a mistake on his tax return, do you think HMRC will pick this up, or will he get away with it?".

Obviously, I'd be wrong in your case, though.

If your father makes the correction himself then he virtually guarantees that will only have to pay the additional tax that he should have paid anyway, plus some interest.

If HMRC pick this up then he will have to pay the additional tax, plus interest, plus quite possibly penalties.

There's been a lot of good (and free) advice on here for you to use.  Sorry if you don't like it - that's just the nature of a public forum.

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By Martin B
05th May 2014 22:28

Neleem Patel
If your dad was overcharged by mistake by the local mot garage/ pharmacist/ whoever. Do you think they should contact him when they find out or keep quiet until IF & when he discovers it ?
By asking your question I am sorry to say I have a feeling you are trying to establish if your dad can get away with it.

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By neleem patel
06th May 2014 14:46

My initial question appears to have been seriously over analysed and now my father and I have been branded as multi million pound tax fraudsters by some of the responders on here which is very funny.  I think I naively assumed I could get a helpful discussion going on the matter. 

Anyway a couple of responses have been useful and I am pleased to tell you all that the matter has now been resolved after a phonecall to HMRC this morning.  The treasury will now be richer to the tune of seventeen pounds and sixty pence. (no penalties or fines). 

 

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Replying to Agutter Accounts:
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By cbp99
06th May 2014 16:00

.

neleem patel wrote:

I am pleased to tell you all that the matter has now been resolved after a phonecall to HMRC this morning.  The treasury will now be richer to the tune of seventeen pounds and sixty pence. (no penalties or fines). 

In the light of the original question I confess to being puzzled by the small amount of extra tax.

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Stepurhan
By stepurhan
06th May 2014 16:07

Simple solution

If you genuinely feel upset by "misinterpretation" of your question, the answer is simple. Give a legitimate reason why you needed to know if HMRC verify pension contributions.

As it stands, no-one has been able to come up with a reason for asking the question other than "can we get away with this?". Since this clearly offends you, perhaps you could posit your reasoning for asking in the first place. Your assertion that, if they didn't verify, you would deal with it "in your own good time" sounds a lot like "see how long we can get away with it" so I'd go with something better than that if I were you.

Regardless of the tone, the information about why leaving it to HMRC to notice is a bad idea is good advice anyway. Even if you really were planning to deal with it in "your own good time", you should be grateful for being told why doing that is a bad idea. I would go further and say that expecting penalties to be at the level of careless error (max 30%) was optimistic. If you knew of an error and did not notify HMRC then I would say you were moving into "deliberate and concealed" territory.

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By johngroganjga
06th May 2014 16:28

Over-claimed contributions must have been £44.  Not much for an employer to pay over a whole year.

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By neleem patel
06th May 2014 16:28

Over analysing.......

I have provided a reason,  If that is not good enough then I can make one up if that helps my query get answered?  LOL

But in all honesty the matter is resolved now and I do think there was an element of over analysis. But thats fine I expect that from a forum full of accountants ;)

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Replying to penelope pitstop:
Stepurhan
By stepurhan
06th May 2014 17:34

No you haven't

neleem patel wrote:
I have provided a reason,  If that is not good enough then I can make one up if that helps my query get answered?  LOL
I've re-read everything you have posted, and the closest you come to a reason is "if they don't we will deal with it in our own good time". Since that boils down to "we will get away with it as long as we can" then your offense at being treated as a tax evader is a bit OTT.

Also, if the figures were genuinely as small as you are now indicating, then why ask at all? Would you get more offended if I said that I have trouble believing that they are genuinely the value of employer's contributions on a higher rate taxpayer?

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By neleem patel
06th May 2014 16:35

NEST

It is a NEST pension , his employer only started it in December 2013.  They are doing the minimum requirement I think.

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By justsotax
06th May 2014 16:56

Perhaps you should not ask a

question on an accountants website if you got what you expected....Can I suggest next time that you ask the man down the pub, I suspect you will get the answer you would have preferred - might not be correct but hey who cares...

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By neleem patel
06th May 2014 17:04

Thanks

Top advice! thanks.  Don't ask an accountant.

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By justsotax
06th May 2014 17:08

It depends if you want the correct answer

or not...

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By neleem patel
06th May 2014 17:16

Yes I do want the correct answer

The correct answer would have focused on my question amount pension contributions being tracked by HMRC and not about managing when and how the error should be fixed.  This is not what I required advice on although I did welcome comments I did not expect a bashing in tax morals.

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By neleem patel
06th May 2014 17:39

and it goes on....

stepurhan- You clearly have no knowledge on the NEST pension scheme. 

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By Paul D Utherone
06th May 2014 17:44

... now if you'd said the tax was <£20 originally

I might have tailored my answer to "it's within HMRC assessing tolerances and they're unlikely to be interested"

Hey ho

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By neleem patel
06th May 2014 17:59

Goodbye......

I know someone else on here will want the last word, so feel free to do so.

Thanks to the posters who provided courteous and respectful responses.

Although overall I don't think this chain has been the best advertisement for accountants. 

 

 

 

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Replying to C Graham:
Locutus of Borg
By Locutus
06th May 2014 22:52

What did you expect?

neleem patel wrote:

I know someone else on here will want the last word, so feel free to do so.

Thanks to the posters who provided courteous and respectful responses.

Although overall I don't think this chain has been the best advertisement for accountants. 

You asked for comments ... and you got lots.

It's an open forum primarily for accountants, so why should we restrict our answers to the narrow question that you raised?  Especially when, as many suspect, there may be broader issues involved.

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By justsotax
07th May 2014 09:20

I was wrong...

he is the man down the pub...giving the type of advice that us as a profession have to deal with in the aftermath in order to help the client who has been given the questionable advice...

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