Are there serious HMRC computer problems?

My small client base seems to have suffered a lot of processing errors recently

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Having had the usual manic January and taken time out this month, I'm now catching up on recent events.

I run a small practice by myself and annually only complete about 60 personal tax returns. Yet, those 60 seem to have encountered an inordinate amount of processing problems with HMRC.

1. Client's 2022 tax return was submitted in January 2023 showing a liability of a little over £300. HMRC's record shows the return as being issued on 6 April 2022, but having been received on 29 April 2021, with a nil liability. The account is currently in credit by that amount.

2. Another client's 2023 tax return was submitted in early January 2024 with a liability of over £2000. It is showing as having been processed on the same day, but with a nil liability. Having paid that and the first payment on account for 2023-24 the account is in credit by over £3000.

3. A third client's tax return was submitted on 31 January 2024, and my software says it was accepted a couple of minutes later. HMRC have no record of it and have requested that it be submitted again and to lodge an appeal against any penalties.

With regard to #3, the return has been resubmitted today, as requested, as an amended return with an explanation in the additional information box. Am I required to advise them of the errors at #1 and #2? Correct information has been submitted to them but they haven't processed it correctly.

Given that these incidents relate to about 5% of my client base, just how widespread are these kinds of problem?

Replies (22)

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By bernard michael
24th Feb 2024 09:30

Very

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By MartinGWilson
24th Feb 2024 19:30

I have a client who received a notice of coding a couple of years ago which stated that there was £1034 tax underpaid in prior years. I have done her tax return for about 20 years and the tax is always paid before 31 January each year. I called HMRC and asked how there could possibly be an underpayment as returns had been filed and paid ontime. After a brief review the revenue man said, "Oh ignore it, we get a lot of these. I have removed it from her coding". Had my client not used an accountant I dare say she would have just had it deducted through PAYE along with all the other "lot of these" that had similar errors. Definitely issues with their systems.

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Replying to MartinGWilson:
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By Retrocanary
27th Feb 2024 10:06

MartinGWilson wrote:

I have a client who received a notice of coding a couple of years ago which stated that there was £1034 tax underpaid in prior years. I have done her tax return for about 20 years and the tax is always paid before 31 January each year. I called HMRC and asked how there could possibly be an underpayment as returns had been filed and paid ontime. After a brief review the revenue man said, "Oh ignore it, we get a lot of these. I have removed it from her coding". Had my client not used an accountant I dare say she would have just had it deducted through PAYE along with all the other "lot of these" that had similar errors. Definitely issues with their systems.

I have seen a few cases recently where the coding is just plain wrong and has been for some time. HMRC correct them as soon as you get in touch with them and seem to have no answers as to how the code went wrong and just stayed that way for ages. As you say, as accountants, we deal with people who have to have slightly more interaction with people who are just on PAYE, so will be more likely to question it, which makes me wonder how many thousands out there that must be on the wrong code and go along with it not really knowing because they don't have that level of interaction with the tax system. I think there is a huge Post Office-style scandal just waiting to happen at HMRC.

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Replying to Retrocanary:
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By rmillaree
27th Feb 2024 11:16

£1034 tax underpaid in prior years

i always start from viewpoint these are wrong unless i or hmrc can satisy me they are correct - hmrc will happily treat these fake entries as being real and particularly if they get past the end of they tax year unoticed it can be hard to ensure they dont end up on tax calc even if they were fake in the first place and hmrc agree they are fake - the computer often chucks it out anyway on tax calc.

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By rmillaree
26th Feb 2024 09:15

perhaps unlucky

1 - hmrc should confirm but possibly they removed client from sa near start of 21/22 year.

ref 1 and 2 , returns do stick from time to time and its probably more likely to happen if return has been procesed as nil return.
If return has stuck helpline should cofirm they have it and should be able to action processing.

Note there is a difference between hmrc having received returns and having processed then for reasons above. If they get stuck they often need someone to flag up that fact later. Not convinced they check fully internally.

ref 3 - thats slightly odd. Are you sure it wasnt received on the basis it could possibly be rejected later if they couldnt do normal checks at that time ?

to be fair to hmrc the process is most pretty reliable. You should be expecting things to happen if returns have previously been captured as nil or you submit at peak filing deadline where hmrc may not instantly confirm if returns were "fully accepted"

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Replying to rmillaree:
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By Souwester
28th Feb 2024 12:55

1. I'm fairly sure that a return was issued on 6 April 2022 and that he hadn't been taken out of SA. For many years he's had a liability arising from child benefit payments, less a reclaim on business mileage. It seems so odd that they can have a received date before the issued date.

2. This has not been a nil liability return for many years and was submitted on 2nd January, so hardly peak submission time.

3. Yes, it was submitted on 31st January but hasn't been a nil liability case. This year, though, there was a new claim for marriage allowance. Five days after resubmitting the return as HMRC requested it is not showing up as having been received.

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Morph
By kevinringer
27th Feb 2024 09:55

The main cause of HMRC failing to capture Tax Returns is Marriage Allowance. I've looked at my figures for 2022-23. I've had to progress chase 7% of my submissions, all because of Marriage Allowances. Even though I have progress chased them all at least once with HMRC, 4% remain uncaptured as at today.

But HMRC's computer problems are not confined to MA. I've received dozens of SA302s for clients who paid voluntary Class 2 NIC on 30/31 January and HMRC confirm they received them on time, but HMRC have issued SA302s saying they were not paid on time.

It isn't just HMRC's older systems that are not working, look at all the problems with HMRC's newer systems such as 30/60-day CGT, VRS. Only this morning we've got a problem trying to file a VAT return for a client. The MTD software says no VAT return is due and when we look in the ASA it says no VAT returns have been due during 2023 either, but we filed 4 for that client in 2023. We never experienced this problem when HMRC were using the old mainframe.

The problem is that HMRC have overspent by £1 billion on MTD ITSA which means all IT resources have had to be diverted into MTD from other areas. So there's no money left for anything non-MTD. HMRC's MTD vanity project is having serious adverse repercussions for all HMRC services.

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Replying to kevinringer:
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By FactChecker
27th Feb 2024 18:56

"The problem is that HMRC have overspent by £1 billion on MTD ITSA which means .. there's no money left for anything non-MTD"

Sounds horribly plausible, but do you have any quantifiable/citeable basis for the assertion (particularly regarding cancellation or freezing of specific projects)?
P. Eye would love to get their teeth into a juicy HMRC scandal (but are sticklers for facts - however obtained).

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Replying to FactChecker:
Morph
By kevinringer
28th Feb 2024 10:09

My opinion is based on what HMRC staff tell me and feedback from HMRC on the agent forum.

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Replying to kevinringer:
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By rmillaree
27th Feb 2024 19:10

"But HMRC's computer problems are not confined to MA. I've received dozens of SA302s for clients who paid voluntary Class 2 NIC on 30/31 January and HMRC confirm they received them on time, but HMRC have issued SA302s saying they were not paid on time."

Sigh - we all know hmrc take time to update their computer systems ref filing of returns and payments - it should pretty much be a given if returns are submitted near deadline or peeps pay near the deadline day that hmrc wont be able cope and peeps will ned to ring class2Ni team - hopefully thats good incentive for them not to wait when they know that the info leaves the system on 31st January. I think its unfair to expect hmrc to work magic ref this annual "shutoff of info" if the system is porgrammed as such and genrally there is no ned for peeps to wait till deadline day to pay.

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Replying to rmillaree:
Morph
By kevinringer
28th Feb 2024 09:13

Taxpayers don't have to wait until the deadline day to pay, but law allows them to pay on the deadline day. If HMRC can't cope with the law, that's HMRC's problem. Taxpayers should not have to pay early just because HMRC can't cope with the law. HMRC won't give taxpayers any leeway if taxpayers can't cope with the law.

To make matters worse, I've encountered cases where the taxpayer paid on 30 January 2024, and the payment appears on GOV.UK dated 30 January, yet HMRC have still issued an SA302 saying the payment was late. Just how much slack are you prepared to give HMRC? If HMRC can't cope with payments 2 days before cut-off, next year it might be 3 days, following year 4 days, soon it will be a couple of weeks. Just how sloppy will HMRC have to get before you stop supporting them?

HMRC has been able to deal with 31 January payments since 1996. Back then, all payments were by cheque. Today, all my cases paid digitally using either online banking or debit card. That's far less work for HMRC than in 1996, yet HMRC can't cope.

This is a clear case of HMRC incompetency.

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Replying to kevinringer:
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By rmillaree
28th Feb 2024 12:05

If HMRC can't cope with the law, that's HMRC's problem."

there is simple workaround here ring class2NI - taxpayers and agents sometimes need to accept that there are it issues that cannot be solved and they eitehr ned to plan or contact the helpline to sort. hmrc are no absolving themselves of teh ability to sort - its only ope phonecall , no more hasle than complaining its wrong in the first place and crying when nowt can be done.

. Just how much slack are you prepared to give HMRC?
it is waht it is with their systems - sometimes we know they arent going to be changed so peeps have to accept reaility. It might be they need couple of working days to action - in that regard it is what it is however much you moan hmrc are unlikely to change how they do things

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Replying to rmillaree:
Morph
By kevinringer
28th Feb 2024 12:46

Only 1 phone call? Last time I phoned NINO I was queueing for 40 minutes and they only would deal with 1 client. I've got over a dozen cases so far. So that's about 10 hours. Why should I have to do this workaround merely because HMRC have made mistakes. Who do I send my bill to for the 10 hours? Maybe you'll be happy to settle it because I know my clients won't want to pay when they complied with the law and paid everything by the due date.

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Replying to kevinringer:
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By rmillaree
28th Feb 2024 12:58

at the end of the day the client pays the ni - i would be pasing them the contact number and telling them what needs to be done If needs be. the realityn is it does need to be done.

the good news here is that there is no particular hurry to sort

i dont disagree with your point thats its poor service and far from ideal - but we are where we are it aint gonna change and you or your clients need to sort out withn class2ni team - that being the case if it annoys you and you dont want the hassle tell them they need to sort

"Maybe you'll be happy to settle it because I know my clients won't want to pay when they complied with the law and paid everything by the due date."

the problem you have is any other remedy to fix the issue is more hassle - i certainly aint going to sort it for you and i am just clealry outlining the position of where we are and the fact that complaining is simply not going to alter facts of what needs to be done in more streamlined manner - so however valid your complaints are you are wasting your time to do anything other than do as hmrc advise imho.

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Replying to kevinringer:
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By Souwester
28th Feb 2024 12:57

#3 of my examples was indeed a new marriage allowance claim case.

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Replying to kevinringer:
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By Dogracer
28th Feb 2024 18:38

If you are transferring marriage allowance then file the person transferring the surplus first then wait a couple of days before filing the other return

Good tip from Rebecca Bennyworth

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Replying to kevinringer:
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By Dogracer
28th Feb 2024 18:38

If you are transferring marriage allowance then file the person transferring the surplus first then wait a couple of days before filing the other return

Good tip from Rebecca Bennyworth

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Replying to kevinringer:
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By Dogracer
28th Feb 2024 18:38

If you are transferring marriage allowance then file the person transferring the surplus first then wait a couple of days before filing the other return

Good tip from Rebecca Bennyworth

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Replying to Dogracer:
Morph
By kevinringer
29th Feb 2024 09:34

I know about that, but why should we have to dance around HMRC's inadequate IT? Legally we should be able to file at the same time, and if its 31 January, we're not going to wait a day. HMRC have been aware of this problem for many years. HMRC should fix it. HMRC aspire to be the most digitally advanced tax authority in the world, so fixing this problem should be a walk in the park for HMRC.

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Replying to kevinringer:
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By rmillaree
29th Feb 2024 10:09

i am not convinced hmrc are doing anything wrong here legally - hmrc are not denying the opportunity to pay the stamp. this is purely practical issue with old system that is evidently not easy to change - would be pretty damn sure no one expected class2ni to even be in the calc - never mind having to make very technical choices as to how and when it needs to be removed when the main system was setup yonks ago withn none of that being planned.

not sure why you canty just accept its not possible and do the sensbile thing all other accountants are doing and simply say - note if payment and return not fully cleared on hmrc systems by 31st Jnauary you will need to contact class2NI time on to sort out payment allocation or make payment.

"so fixing this problem should be a walk in the park for HMRC."

couldnt disagree more - to log exact date and time return processed/received and try and find out when payment cleared banking sytem is imho beyond fessible for hige fixed IT system setup to simply flag if item is processed or not.

Hopefully if i am talking nonsense peeps with experiencce of legacy IT systems will correct me.

"Legally we should be able to file at the same time"
Well you can file on deadline - so not sure what your point here is

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By Andrewmoore777
27th Feb 2024 12:28

You are not alone. I submitted a trust tax return in hard copy on 24/10/23. HMRC processed it in late January 2024, completely failing to capture the property income so the online account now shows a credit for the (correct) tax paid

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By LW64
29th Feb 2024 10:17

I had someone given a very large K code when in fact, after calling HMRC they were told it was a mistake and they should just be on 1257L.
Have Fujitsu had their hand in any of this??

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