PAYE Refund - Advice Please - Is this HMRC fraud?

PAYE Refund - Advice Please - Is this HMRC fraud?

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A client started receiving PAYE underpayment letters at the start of this tax year so I investigated the situation. My findings were that instead of the client being underpaid, HMRC had allocated a payment to the wrong tax year and, instead of an £1,100 under payment there was in fact an overpayment in the 2010/11 tax year of just over £500. This relates to an over payment of £429.69 in 2005/06 tax year being re-allocated to 2010/11, interest accrued on this over payment & a small (£62) overpayment re-allocated from 2009/10 tax year.

I contacted HMRC by phone to see how I could get this refunded to my client and they sent through form P35D which I completed stating the above (overpayment related to re-allocation of over payments in 2005/06 & 2009/10 + interest giving the relevant amounts for each year etc.

Today I received a letter stating "You have told me that the overpayment was due to reallocations from previous years. This explanation is not sufficient to allow me to repay or reallocate the money as requested. I need to know how the overpayment arose and the month(s) that the error occurred along with the amounts that were paid compared with the amounts which should have been paid. Unless a satisfactory explanation is provided, the payment will be permanently left on the client's record"

HMRC have confirmed that an overpayment has occurred but are flatly refusing to give the money back until an exact description of how this occurred is given. As I have only acted for this client for 12 months and the over payment relates to 2005/06 I don't know what more I can do. What troubles me is that, firstly, this matter came to my attention because my client was being bombarded with under payment letters from the debt management team due to their own error (no mention at any stage of the corresponding over payments in other tax years) and secondly my client quite rightly thinks that they should be refunded in full.

What recourse do we have / has anyone else had similar problems with PAYE? 

Replies (19)

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By chatman
01st Nov 2013 11:43

Tribunal
Go to the Tribunal and claim costs. I don't see how you could lose. You should probably go through the HMRC official complaints procedure first to strengthen your claim for costs.

Thanks (2)
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By User deleted
01st Nov 2013 12:54

Try AAM

I would suggest you try the AAM Team.  I had the exact same problem and they sorted in within 24 hours !

Thanks (1)
Me!
By nigelburge
01st Nov 2013 13:23

County Court

Go to the County Court and claim costs. I don't see how you could lose. 

HMRC will cough up long before the hearing date set.

But try the AAM first.

Thanks (1)
Johny Fartpants Picture
By johnny fartpants
01st Nov 2013 13:26

Thanks both for the advice.

Mathswizard, I have just emailed the AAM Team as I would rather not go to tribunal if possible. Just want things sorted as quickly as possible. Typically the letter gives the PAYE employer's helpline number (not the dept who wrote the letter). Employer's helpline can't resolve as they haven't got access to the P35D. Only HMRC could create such a massive [***] up by mis-allocating funds to the wrong place and then deny you any reasonable means of resolving the situation easily.

Very frustrated!

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7om
By Tom 7000
01st Nov 2013 14:47

We have something simlar

It seems an instruction has been sent out NEVER to repay any PAYE ever...its very bizarre...

I am arguing even as we speak

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Replying to andy.partridge:
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By andrew.hyde
01st Nov 2013 15:46

Hang on Basil

fawltybasil2575 wrote:

some of the actions by HMRC ( in inventing stories to avoid paying taxpayers monies which are due to them)  would, if perpretated by private persons, render them liable to imprisonment - but Crown privilege prevents their receiving the appropriate sentence    

I'm sure you're right, but imprisoning 60,000-odd HMRC staff is going to put a bit of a strain on the prison system.  Or did you have something more draconian in mind?

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Me!
By nigelburge
01st Nov 2013 18:06

@Basil

Thanks for that - very interesting.

Do you know the actual legislation for this? Not that I doubt what you say, but I always like to see what the relevant Act actually says.

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David Winch
By David Winch
01st Nov 2013 19:22

County Court

Basil

I thought claims against HMRC could be brought in the County Court (see s15 Crown Proceedings Act 1947) but that some methods of enforcing judgments could not be applied against the Crown (see Civil Procedure Rules 66.7).

But this is not my field and I stand to be corrected.

David

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By zeofiles
01st Nov 2013 20:17

Re-allocate to current year.
We have had several P35d's and in each we provided HMRC with the reason why the overpayments had figured.

For each, HMRC refused the refund/reallocation request with the same letter as mentioned in this thread.

We have written back and told HMRC that we think adequate explanations have already been provided and therefore we do not think it's correct for then to hold our clients money. we have therefore suggested to our clients that they deduct the overpaid amount off the current year liabilities.

I am not suggesting this is the absolutely correct of dealing with it, but at least the clients get their money back.

The biggest 'crime' being committed by HMRC at present is the with holding of CIS refunds where there are no payroll deductions to offset.

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Replying to User deleted:
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By [email protected]
11th Nov 2013 21:16

CIS

Yes going through this process at the moment,  on the online paye account for my client I have noticed HMRC have not uploaded last years P35 yet, showing a refund due on CIS  Have put in calls and letter but they are saying not until January can they do a refund.

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By dropoutguy
02nd Nov 2013 02:54

AAM Team

What is the AAM Team please?

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Me!
By nigelburge
02nd Nov 2013 11:25

@David & Basil

I also seem to remember that "he who is not to be named" stated that he had applied to the County Court for an Order of Mandamus ordering HMRC to make the repayment that was clearly proved in Court to be due.And he got it and HMRC paid up tout-de-suite.

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David Winch
By David Winch
02nd Nov 2013 11:33

Mandamus

Nigel

The courts in England & Wales try very hard these days to avoid Latin phrases or archaic terms (unlike Scottish courts).  Whether this is because they do not want to be confused with Harry Potter's world of witchcraft and wizardry I can't say!

These days the courts refer to a "mandatory order".  But I take your point.

David

Thanks (1)
Me!
By nigelburge
02nd Nov 2013 11:54

I knew I had seen this somewhere....

This is the HMRC guidance on service of writs on them. They have to be served  on "General Counsel and Solicitor to Her Majesty’s Revenue and Customs." 

http://www.hmrc.gov.uk/manuals/dmbmanual/DMBM668900.htm

I betcha that will make HMRC jump.

 

Here are a couple of threads from the past on this very subject.

https://www.accountingweb.co.uk/anyanswers/question/court-action-recover-debt-due-hmrc

https://www.accountingweb.co.uk/anyanswers/can-legal-action-be-taken-against-hmrc-recover-debt/489813

 

Thanks (1)
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By User deleted
03rd Nov 2013 00:48

AAM Team
Hello dropout guy - AAM Team is Agent Account Manager, just sign up online, you can then email issues, proper tax inspectors deal with it, call you and usually resolve things quickly. Good service.

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By dropoutguy
03rd Nov 2013 03:24

Seems a good idea mathswiz.  I'll look into that.

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Johny Fartpants Picture
By johnny fartpants
08th Nov 2013 15:19

AAM Team

Quick update on this (for anyone with similar issues in the future), AAM team have requested the 2005/06 PAYE info from Cumbernauld. Expect 4 to 6 weeks for a reply.

The service is a great idea, you speak with someone helpful with a view to getting sorted as soon as possible. However the resolution may not be as quick as suggested ealier in the post. The specific problem here is that no-one knows EXACTLY WHY the overpayment occurred as it was 7 years ago. HMRC's view is that this could just as easily occurred because the P35 under stated the PAYE / NI payable. A bit mad but that's HMRC for you!!

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7om
By Tom 7000
08th Nov 2013 15:28

deduction from following year

I said we were going to do this. they said if you do you are in default and under no circumstances must you do this....

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Johny Fartpants Picture
By johnny fartpants
08th Nov 2013 15:35

Hi Tom. I have asked for this to be carried forward to the current tax year to see if this makes things easier (possibly less proof required of how overpayment came to be). I will let you know what happens when everything is resolved.

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