Word of warning

Word of warning

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Not really a question - more a warning to other accountants. My client's state pension as per the HMRC website and her PAYE coding notice for the last 4 years was £8k to £9k and her tax returns were prepared on this basis - and the client signed the returns. It now transpires that HMRC were wrong and it was only about £2k.HMRC told me yesterday that they were using the wrong figures. This appears to have come to light because of RTI and this being picked up by someone at HMRC. Apart from the obvious point - why did the client sign a clearly incorrect tax return - I have now to get HMRC to revise incorrect returns for 2009-2011.               

Replies (10)

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By vince8
09th Nov 2013 17:39

Who prepared the returns?

I only ever put the amount received on the tax return, usually from the annal increase statement issued around Feb each year or from what the client has confirmed was received.

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By mackthefork
09th Nov 2013 18:14

Goodly idea

These HMRC coding notices often have some incorrect details.  As to the OPs question, I can confirm 19 out of 20 clients do not read the return and have an expectation that you will get it right for them, this is why it was signed.  Better to ask client for the date and amount receive of two consecutive payments in the tax year, or follow Vince8s advice.

Regards MtF

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By pawncob
09th Nov 2013 20:55

Help Me Return Correctly

DON'T EVER use any information provided by HMRC.  Codes are always wrong, "helpful" information provided on the tax return page is always wrong.(Your client's  state pension was £xxx. No it wasn't, it was £yyyy)

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By DMGbus
10th Nov 2013 09:33

Credibility check - the advisors role

I always try and make a credibility check of State Pension - ie. from a year where I've seen accurate data then to year where reliance on HMRC might be necessary (client lost the info) - the increase from 11/12 to 12/13 is around 3.5%.

Even where a client provides data it can't be trusted and must be credibility checked.  On reviewing a tax liability for a colleague I found that their client had provided a 12/13 pension figure that was 10% higher than 11/12 : the client had made the common error of quoting CURRENT pension amount rather than past tax year.

As for clients signing things which are very wrong, we must not lose sight of the fact that clients trust us as advisors to check things - we are not FORM FILLERS we are ADVISORS (who hopefully do use credibility checks).   A further example of an advisor wrongly accepting at face value what a client provided as data was of a private pension: a 12/13 return that I reviewed no longer claimed RAR (but 11/12 did) and 12/13 showed no private pension received - so I immediately considered there to be an error, which there was.  The error was that RAPs ceased in May 2013 so client gave information for 12/13 stating no pension premiums paid 12/13.

The bottom line is this: we as advisors should not accept information available to us at face value, unless we are happy to take on the role of robots filling in forms regardless.

 

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Chris M
By mr. mischief
10th Nov 2013 10:40

I agree!

"We as advisors should not accept information available to us at face value."

Especially when it comes from HMRC!

On moneysavingexpert.com, my strapline since 2010 has been

"Hideous Muddles from Right Charlies"

Nothing I have seen in the last 3 or 4 years has caused me to change that, despite a load of stick from the HMRC stooges on the site about the strapline.

 

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By Marion Hayes
10th Nov 2013 12:59

HMRC INFORMATION

was previously limited to being notified of the starting rate for a pension but no annual updates.Hence they applied a percentage increase which did not accurately reflect the increase received. As years went on this could multiply. That was the good old days.

Since last year the computer at DWP now talks to the cmputer at HMRC, but not all HMRC staff can see the source to confirm what it has said. Sadly, as some of my TOP's work has shown you are now reliant on the DWP staff coding their input correctly. One lady I visited had been taxed on her state pension plus pension credits. DWP  computer told HMRC computer which issued tax calculations without any human intervention. Result was an over 80 lady receiving a demand for over £3,000 which, on ringing HMRC, couldn't possibly be wrong even though her pension was in reality less than £3000 per annum and apart from expenses for volunteering in a charity shop she had no other income/assets.

 

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Chris M
By mr. mischief
10th Nov 2013 15:59

recent example

I could post one of these per month.

This months' is a striking off which was actively encouraged by HMRC.  Corp. tax gave me an unsolicited phone call to apply to strike off.  I questioned whether it would be allowed due to the VAT and PAYE debts.  The gus said:

"We won't object.  It has no funds to pay those debts and has not traded for 2 years."

Fine.  I applied for the striking off.  You've guessed it - rejected.  So I wrote to ask - in nice language - when the left hand was going to tell the right hand what it was doing.

Letter back from C tax pretty much denying the whole thing and suggesting I call the VAT helpline.  In the world of HMRC this is taking ownership of the taxpayer's case.  In the rest of the world it is passing the buck.

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By Laurence52
12th Nov 2013 14:20

First yesr when state pension received

In the first year that someone starts receiving the state pension, HMRC may issue tax code notices on a month 1 basis and in that case the code notice will show a full year's state pension.

 

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By janefg
13th Nov 2013 13:45

A virtually blind neighbour whose tax I do.  Put on his State Pension from February letter received from Pension Service.  They sent back big repayment and said he had the pension figure wrong.  He rang up and was told very rudely by HMRC that all their information was correct as direct from Pension Service.  I told him not to bank cheque, requested letter from Pension Service with pension paid for relevant year, sent to HMRC who revised computation. But - no apology to my neighbour.

Another client was told 2 years running that we had the State Pension figure wrong and we had to get letters from Pension Service.  Needless to say, we were right on both occasions.

This has only been happening in the last 3 or 4 years.

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By ireallyshouldknowthisbut
13th Nov 2013 14:04

.

As I used to tell my audit juniors "you are ticking your right [***] cheek your your left [***] cheek" in reporting data HMRC hold to HMRC.........

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