I have in the past felt queazy about the tick box 19B.8 electing for a repayment by cheque "if you do not have a bank or building society account". A large number of our clients have such accounts but nevertheless prefer to have repayments dealt with by cheque and ticked that box as the only practical measure to achieve this end. Justifiably or otherwise they are unconvinced by HMRC claims that direct bank transfers are more secure. They worry that a CD containing their bank details may go missing in the post (that could of course never happen) or even that bank accounts may get "swapped" between taxpayers in the HMRC machine (as with, eg, NI numbers). They also worry that forcing taxpayers to disclose bank accounts has a more sinister long-term objective - preparatory to HMRC getting powers to extract liabilities by direct application to the bank.
I am bound to say that on balance on this issue I have some sympathy with HMRC, that repayment by bank transfer is (probably, on balance) a bit more secure, and less onerous in administration time and costs. That said, if a taxpayer feels particularly strongly on the issue I am uneasy about riding roughshod over those concerns.
The wording of the notes on the new tax return shows a stronger commitment to abolition of cheque refunds. Does this attitude have the support of the profession? What is the general law as regards the rights of a creditor to insist on settlement by a particular method, as contrasted with the rights of a debtor to forbid settlement by a particular method? Are HMRC exempt from those rules?
I see that the tax return boxes are essentially the same as before in this regard (and that as with previous years, if you are filing a short return you get no option even to tick the box saying that you have no bank account, although that represents no change). Is it still just a matter of same old same old?
Clint Westwood
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Trevor, depends which bank you're with ...
... my old firm had their account with one bank which used to print the taxpayer's name alongside the credit, so no problems tracing who the funds were for. We used to set all refunds to go into that account, would take out our fee and refund the balance. Meant a lot of work January and February, but it meant debtors were at a minimum and we could intercept incorrect refunds before they went to the client. My new firm's bank just prints "SA" on the statements - no help at all. The problem is exasperated by the fact that we don’t always receive HMRC’s repayment notice. As a result we only put a few problem cases through the Clients’ Account and the rest are issued by cheque.
I appreciate Client’s concern. By ticking “I don’t have a bank account” and signing the Return, is the client making a false declaration?
Client Account
If you do what John Doe suggested by receiveing the cheque in your name remember this should be banked into a "Client Account" keeping it seperate from your businesses money.
You could always...
You could always accept the repayment cheque on behalf of your client box 14 something or other, put it into your bank account , and then write out a cheque to the client for the amount refunded.
My old firm used to do this, if we got them out in time it was just a simple contra entry in the company accounts and there was no need for a client account.
We also used to 'take' fees from clients tax refunds like this, but as said it adds a layer of red tape.
As a side effect if HMRC get it wrong to your calculations (it happens) you can intercept the cheque before a client cashes it or gets the money, I tell you I've seen it where HMRC got something badly wrong and automatically issued a £2000 cheque, client cashed it, HMRC person had got it wrong (I thought it was wrong too when we received the calculation) , he cashed it and HMRC wanted it back.
But I do conceed a point in that HMRC is not to be trusted and you should keep as much information private as possible as you can be sure as sure they harvest such information. I forget the progress of the new changes which allow HMRC to TAKE tax from your bank account but I recall thinking it was a bad idea.
Same old I think
It's always been a bit bizarre. The only way to receive a cheque is to claim you have no bank account. In which case where's the cheque going to be paid in? Surreal.
I've always defaulted to asking for a cheque on the grounds that people get a buzz out of receiving a cheque in the post from the Revenue of all people and receiving notification of a bank giro credit isn't quite the same. I know one client who framed his tax rebate cheque.
So the lies will continue if only because that's the only way. We actually get more problems from the clients ("but I have got a bank account and you've said I don't") than the Revenue who couldn't give a monkeys.
Client refund into bank account
Don't forget that if you elect for the refund to be paid direct to your firms Clients Account, HMRC do not tell you who the money is for! Narrative on your bank statement is just SA.
How useful is that?