Threatening?

Threatening?

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Have just seen a potential new client who is the unfortunate recipient of calculations for the last 4 years showing an accumulative underpayment of nearly £4,500, without a covering letter of explanation but with 2 follow up 'phone calls from HMRC offering payment by monthly direct debit!!

The underpayment is due to coding matters as he received 2 sets of personal allowances against 2 private pensions but this is not the point of this query.

The client queried the underpayment as he could not understand how it could have arisen. The HMRC response was to write to him saying that they were looking into it but they have now allocated a UTR and sent him Tax Returns for the past 4 years so that the true amount of the underpayment can be quantified and collected under self assessment. The covering letter I feel is quite threatening as it says:

"You will have to complete the Tax Returns within 3 months or we will charge penalties."

"You will need to pay the full amount of tax due by the same date or we will charge interest and surcharges."

He has been under PAYE all his life and has never needed Tax Returns and the calculations were sent without any suggestion of Tax Returns being required.

On the face of it it looks like HMRC has thrown their toys out of the pram because the reason for the underpayment arising has been challenged. Quite understandably the client has found the reponse and the request for Tax Returns quite stressful as he has never been involved in self assessment returns at any time in the past.

I know what the response to the HMRC latest missive needs to be but has anybody else found HMRC intimidating in these circumstances and what was the outcome?

Replies (4)

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By ACDWebb
10th Feb 2012 13:56

It is unfortunate wording

and does not give perhaps the full picture so far as payment possibilities, but so far as the the need to complete the returns within 3 months is concerned is a statement of fact if they are requiring tax returns. What if they said nothing and then because things had limped along because you were not involved and three months came and went followed by penalties beig charged?

As to whether ESC A19 is appropriate in these circumstances (quite possibly here) is another matter and there is a recent thread on exactly the same issue where the query was "is it HMRC's underhand way of trying to get out of the ESC?" - Look HERE, which would suggest that HMRC's approach is at least consistent.

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By codling
10th Feb 2012 15:37

Threatening

Thanks for that reply - not sure how I missed the other thread but there you go! I suppose I have to do some work sometimes!!

One thing I still do not quite understand is that HMRC have calculated a liability already without the need to go through SA so why do they now need Tax Returns. Is it that the calculated liability is not legally enforceable in some way and SA is the only way they can properly enforce payment?

 

 

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By ACDWebb
10th Feb 2012 15:45

They have calculated on what they have

from the EOY PAYE reconcilliation they run. That will just be the PAYE sources they have linked not other income, or indeed personal deductions such as pension conts for which no HR relief has been received.

At the other end of the scale I saw a few clients with mix of small PAYE (taxed) and larger untaxed investment income getting refunds when the rec process only looked at the PAYE and repaid the tax deducted. DOH!!!

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By codling
10th Feb 2012 16:17

Threatening

I understand that but it still does not make complete sense. if the client had accepted the initial telephone offer for payment by instalments then I cannot see that HMRC would have issued Tax Returns, they would simply have taken the money and ran.

All in all it still seems like sour grapes for daring to ask questions.

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