HMRC under fire over tax refund policy

The House of Commons voted on a private member's bill this week that, if cleared through Parliament, will force HMRC to refund businesses it has overcharged within 30 days.

Conservative MP Mike Freer brought forward the bill in response to the inequality of HMRC’s tax refund policy. Currently, businesses must pay taxes owed to HMRC within 30 days or face a fine but when the situation is reversed, HMRC has no deadline or faces any penalties. 
 
 “Small businesses’ takings can vary hugely month-to-month and individual’s circumstances can change, meaning they find at the end of the financial year that they have overpaid their tax. HMRC are far too slow to repay and do not seem to appreciate the huge cash-flow pressures that many people are under,” Freer said.
 
The second reading of the bill is scheduled for 30 March 2012. 
 

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Comments
johnjenkins's picture

Just

johnjenkins | | Permalink

in time for the 2011/12 refunds due on P35's. Interesting to see if it goes through. Even more interesting to see if HMRC take any notice.

Natalie Brandweiner's picture

HMRC response

Natalie Brandweiner | | Permalink

A HMRC spokesperson told AccountingWEB: “The floor of 0.5% rate of interest applied to repayments means that HMRC will pay interest on all repayments entitled to repayment interest, regardless of how low the Bank of England base rate is set.

“Setting a repayment rate higher than the Bank of England rate could lead to taxpayers deliberately overpaying their tax to achieve a higher interest rate than is available commercially. The repayment interest rate formula delivers fairness when the Bank rate is low, without influencing behaviour in the undesirable way that a higher repayment rate would.”