Informal tax calculations
I have now received three informal tax calculations for 2010/2011 from HMRC for clients who are not required to complete tax returns but for whom I keep a watching brief and prepare a return if needed. I also work as a subcontractor at another firm, who have received several more of these calculations.
What alarms me is that HMRC are issuing these based on incomplete information. They may have the P60s for the earnings and pensions but they are using estimates and figures from (probably incorrect) coding notices, which are generating refunds that may not be due. Why are they in such a hurry to do this? Has the criticism about delays in sorting out earlier years pushed them too far the other way?
In one case, I had already prepared a tax return for the client and had sent this to him for signature when the tax calculation arrived. Do I still send the tax return to HMRC to correct the position? It is confusing for both the clients and for me!
DWP information
A word of warning, HMRC are accepting information from DWP without question. Not surprisingly this information is not always correct but because of "Data Protection" it is up to the individual to get DWP to change figures.. In the meantime one client was threatened with legal action to collect tax due.
tax calculations
I received 2 calculations yesterday with different figures on but dated the same date. The difference being the state pension that they had 'corrected' on one of the calculations to reflect a full year's state pension. This was incorrect as the client died in January so a full year was not correct. HMRC had been informed of the death back in January. When I rang them I was told to accept the calculation that held the correct figure so yet again I have wasted an hour in try to agree something that was right in the 1st place. Substituting annual pension figures seems to be a favourite of the moment as I have several cases where pensions have started in the year and they issue a calculation substituting the annual figure - yet more wasted time on both sides.
The other problem would appear to be potential underpayments that get carried forward even where the client had a tax refund under SA for the year the supposed underpayment arose. When ringing up the agent helpline it is astonishing how little the HMRC person understands regarding this. I explained at length that if the client was in a repayment position for the year then there was no underpayment but apparently the computer did not want to delete the underpayment. I am still waiting for a reply to this 3 weeks on!
This is happening to our clients for years they weren't on "self assessments" the calculation-revenue speak-is called a P800! -we have been getting them willy nilly for all sorts of clients-the worst was for a retired client who i insisted be put on self assssment- it was an 09/10 p800 issued in JULY 2010, only 3 months after the end of the tax year....before he filed his SA!
the latest was for a student who get dividends trust income. for 06/07 and 07/08
maybe this is a sign of PAYE catching up after all the headlines earlier in the yeaar.
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Tax calculations
I received 2 calculations yesterday with different figures on but dated the same date. The difference being the state pension that they had 'corrected' on one of the calculations to reflect a full year's state pension. This was incorrect as the client died in January so a full year was not correct. HMRC had been informed of the death back in January. When I rang them I was told to accept the calculation that held the correct figure so yet again I have wasted an hour in try to agree something that was right in the 1st place. Substituting annual pension figures seems to be a favourite of the moment as I have several cases where pensions have started in the year and they issue a calculation substituting the annual figure - yet more wasted time on both sides.
The other problem would appear to be potential underpayments that get carried forward even where the client had a tax refund under SA for the year the supposed underpayment arose. When ringing up the agent helpline it is astonishing how little the HMRC person understands regarding this. I explained at length that if the client was in a repayment position for the year then there was no underpayment but apparently the computer did not want to delete the underpayment. I am still waiting for a reply to this 3 weeks on!