HMRC software fault?
Is it just me or does HMRC's own software calculate tax on interest incorrectly?
Interest is included on the return net, which is rounded (down) to the nearest pound. So if interest of £2.80 is earned gross, it gets added to the return as £2.00.
Then tax deducted at source is calculated by grossing up, so £2.00 divided by 80% is £2.50, meaning £0.50 tax has been deducted at source.
The net figure is then taxed at 10, 20, 40 or 50% respectively! In this case 10% so £0.20, whereas I believe it should be taxed on the gross providing a figure of £0.25.
So instead of being owed £0.25, my client is owed £0.30.
I hope you didn't ask "so what?", so what if my client earned £20,000.80 instead of £2.80? They would have an effective tax rate of 16% and get a £1,000 refund.
I presume commercial software works better but I can't wait for the court case where HMRC blame the tax payer for under-declaring tax by using HMRC's own software. I would be interested in a lawyers interpretation of whether you can sue HMRC for providing dodgy software.
All thanks and praise go to the client who provides you with interest figures on the 30 January.
Welcome to the future, it's broken.
- HMRC filing meltdown? 646 20
- Why do I do this every year 498 12
- File Abbreviated LLP accounts online? 45 3
- Anybody Use Brightpay 737 20
- 'My colleague fills in his own Self Assessment" and he/she claims,x,y and z" 227 4
- Self assesment online 1,048 12
- US/UK Dual Citizenship 255 11
- client can't/won't pay 1,977 42
- Tax Credit Office opening hours 133 1
- Selling Capital Allowences from Self Employed to Ltd Buisness 133 4
- Payment of tax due on 2014/15 Self Assessment tax return 154 2
- Non resident income. 483 21
- UKBA financial requirements for spouse visa 297 22
- Hobby Horse 822 8
- What sectors to target? 626 30
- FYAs on second-hand vans 288 7
- Rent a room scheme query. 202 3
- Watch out self-assessment scam e-mail 315 5
- closing limited company 222 2
- VAT when selling on Amazon 143 1
- Form MR01 (Particulars of a charge) - does this need to be filed if you remortgage with the same lender? 939
- Underpaid VAT assessment and relation to SATR 656
- Did you realise Google will not patch android exploit ... 606
- Latest phishing scam 585
- Cashback for opening business bank acct = trading income? 422
- Auto Enrolment Questions Answered 317
- Scratch Head 249
- Loan benefit after person ceases as director/employee 242
- Sabbatical payments 207
- Negligible Value Claim 182