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.
- Intercompany - Sage 50 Accounts 16 1
- Writing Website Content 407 17
- HMRC Post 873 12
- Rollover Relief - Commercial to Residential 134 3
- Form 17 Download 277 2
- Schedule A losses 408 12
- Just another average day trying to deal with HMRC 1,928 26
- The Pensions Regulator 302 8
- Client having a go at me 642 14
- Companies House BETA 886 11
- VAT on Second Hand Touring Caravans 80 1
- Childcare & P11D 81 1
- Badges of trade 227 2
- Date of leaving on P.45 352 13
- Seeking advice: Charging VAT on commission on my commission! 198 5
- Sage 50 - Aged Debtors and Creditors Reports 101 1
- Member meet up 1 October in London 552 15
- CT600 X ERROR in relation to Tangible Assets 105 2
- Concurrent users 705 9
- What would you do? 1,149 7
- Any knowledge of salesorder.com 443
- Could and would anyone here carry out a hot file review of some non statutory audit work please? 406
- Electric Car 347
- S222 Charge 276
- Corporation tax penalties and fines on the CT600 255
- AIA 232
- IP trans to holding company 214
- Best way to convert Sage data to VT Transaction+ 214
- Payroll Manager - tax code for starter declaration 'C' 187
- Car used both in a partnership and sole trader business - how to claim capital allowances? 182