Problems with HMRC Debt Management Debt Enforcement Unit

Problems with HMRC Debt Management Debt...

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I have recently been in correspondence with HMRC's Debt Management Debt Enforcement Unit, regarding what I believe to be a miscalculation of interest and surcharges.

For several years I worked with our client's Inspector to bring his tax affairs up to date complicated by the matter of a failed property development involving loss claims and estimated then amended determinations. My relationship with the Inspector was always cordial.  All tax returns and loss claims have now been filed and all liabilities have been agreed up to and including 2011/12.

I am puzzled to find when reconciling my client's statements of account, after estimated determinations and assessments had been amended and agreed, that a significant balance remains outstanding despite that the fact that on a regular basis throughout our negotiations with our client's Inspector, our client made several large lump sum payments on account to cover his eventual agreed actual liabilities.

It is clear that payments on account have not been allocated in chronological tax year order.

HMRC Debt Management & Banking Complaints, Shipley, West Yorkshire and HMRC Debt Management Debt Enforcement Unit, Shipley refuse to accept my claim that payments on account have been incorrectly allocated and are aggressively pursuing my client for payment arguing that the Collector of Taxes is free to allocate payments as they see fit unless a taxpayer provides allocation instructions, quoting a section of an internal Debt Management and Banking Manual.

Having reviewed all the leaflets, pamphlets, booklets, tax return guides, statements of account and payment requests sent to our client by HMRC he has on no occasion been instructed or requested to provide payment allocation instructions.

Correspondence sent to our client provides information detailing how to pay online, via a bank, via cheque etc. quoting HMRC sort codes, account numbers and the taxpayer’s own reference however there is no advice, guidance, instructions and/or requests to set out the order of payment allocation when making payments to HMRC.

My client's lump sum payments were always intended to be treated as payments on account towards settlement of his actual liabilities. The total of his lump sum payments significantly exceeds his total income tax and National Insurance liability leaving a balance sufficient to cover all the associated surcharges and interest payments if set off in chronological order

Having spent millions on specialist IT systems I cannot believe that a facility does not exist at HMRC to simply ‘line up the ducks’.

I would have thought that having taken several years to finally agree our client’s liabilities with his Inspector, on a most amicable and cordial basis I might add, our client has a legitimate expectation that his lump sum payments on account are allocated fairly clearing liabilities for earlier years first in chronological tax year order so as not to generate unreasonable and unfair additional interest and surcharges.

I am considering filing a complaint at The Adjudicator’s Office however I would be be grateful to hear from anyone who has encountered similar problems with the Collector of Taxes and has been able to find a solution.

Replies (6)

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By K81
07th Mar 2013 13:41

the self-assessment system does have the ability to re-allocate payments made. I think that Debt Mnagement Unit, curiosly, don;t actually have access to this.

Try telephoning HMRC taxes side & ask for the payments to be reallocated, they may need to refer to back office for this to be done.

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Replying to Montrose:
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By kevinh.peterhunt.co.uk
08th Mar 2013 09:39

Dear K81,

Thank you for your helpful reply.

It does seem that the Collector works completely independent to the Inspector's side operating a "computer says no" attitude.  

 

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By zeofiles
07th Mar 2013 15:17

Computers arent linked

From what I have been lead to believe the debt management system is not linked to the rest of the HMRC system.

Quite often we find debt management chasing a penalty that has either been appealed or has been removed following an appeal. It appears the only communication debt management routinely receive is the instruction to collect outstanding amounts.

As mentioned by @K81 I would deal with the relevant HMRC department and just make a 'courtesy' call to debt management to tell them their information is not upto date

 

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Replying to birdman:
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By kevinh.peterhunt.co.uk
08th Mar 2013 09:44

Dear Zeofiles,

Thank you for your reply, much appreciated.  I'll take your and K81's advice.       

 

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By Malcolm McFarlin
08th Mar 2013 13:00

Similar experience

I find HMRC DMU's to be aggressive and unhelpful.  I got the Tax Inspector involved and he had a 'word with them' -seemed  to do the trick.

The HMRC Complaint procedure is very slow since you can't go straight to the Adjudicator's Office but must go through several lines of Management within HMRC. We have done that with one case and then referred the matter to the Adjudicator's office who replied they are busy and not to expect a reply for at least 3 months and don't bother them in the meantime!

I would suggest you write a letter of complaint to the Tax Inspector whom you seem to have a good relationship with in the first instance.

Malcolm McFarlin

www.mandrtaxadvisers.com.

 

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Replying to Wanderer:
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By kevinh.peterhunt.co.uk
11th Mar 2013 09:32

Dear Malcolm,

Thank you for your helpful response.

Kind regards,

Kevin

 

  

 

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