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Can HMRC do this?

Can HMRC do this?

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A client who commenced self employment in 2012/13 received a tax calculation on 11.11.12 from HMRC for the 2010/11 tax year. This showed that he owed £750 from PAYE income.

HMRC issued a 2010/11 SA return on 25.7.13. When I telephoned to say that SA was not applicable they advised that because there was tax due they were entitled to issue an SA return.

Does anyone know if this is lawful and which legislation they are using.

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14th Nov 2013 09:16

Returns for all.

HMRC actually have power to ask for a return from anyone, regardless of their circumstances. If there is no tax due, then you can usually persuade them to cancel the request, but if they refuse, there is no legal recourse to get one cancelled.

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14th Nov 2013 09:32

I had this recently

I phoned up, went through the list of criteria that is required for completion of a tax return.

When I answered 'no' to them all - they passed the details through to the back office who cancelled the need for a tax return.

I would phone and try again saying he doesnt meet any criteria for a self-assessment return.

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By mhtax
14th Nov 2013 09:40

Do you know why there was an underpayment?

If they thought that the figures they used may be insufficient, or have info that there may be other sources, then they may have issued the return as the start of an enquiry. Maybe the tax calculation had an estimate in it that wasn't queried?

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By beanz
14th Nov 2013 16:40

I khave a friend who is on PAYE but had been self employed for approx 1 year in 2001. He has received a SA request every year since. We fill the form in each year declaring the details from his P60 (his only income of any sort & earning below £25k) we then contact HMRC every year to to ask if he can stop completing SA as he is only on PAYE; they advise us to send a letter detailing this information & assure us this will stop the next request for a SA100 but every year they send a new request.

Good Luck !

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By VLH
to Gargshubham11
19th Nov 2013 10:50

Removal from self-assessment

I would advise a call around now - before the HMRC computer has selected those who will receive tax returns.

Keep the letter saying client has been removed from self-assessment and when/if a notice to file is received ring up quoting date of the letter and ask for a nil return to be captured.

I have been successful with this in the past.  Fingers crossed for you!

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14th Nov 2013 19:19

did your client

react to any demands for the underpayment to be paid?

Typically HMRC issue SA returns to collect PAYE underpayments where these cannot be coded in (as here because no longer employed) and the taxpayer has not responded to requests to pay directly or set up a payment arrangement.

By putting taxpayer into SA all HMRC are doing are creating a legally enforceable tax debt to the extent of the underpayment. Otherwise it would never get collected.

If your client can pay, contact HMRC, say he is willing to make a direct voluntary payment and ask will they cancel the return? Otherwise he is going to incur interest on the underpayment as well now.

 

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By IR35
15th Nov 2013 02:41

Get your client to sign up to

If you have any sense they are under any form of investigation ask your client to sign up to the Federation of Small Business (FSB) and get them to call their tax help line.  

It will cost your client the small membership fee, but will save them and you a load of time (and them their money) sorting it out.

You will should hopefully keep your client, don't worry about losing a potential fee for sending them your insurance for investigations, your client will be happy.

As for your client,  get them to phone the right people on the letters sent to them about missed SA forms,  they will get further than you, as they will be speaking direct to a monkey.

;) 

 

 

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18th Nov 2013 12:32

There is no statutory basis as to what circumstances HMRC require for a self-assessment return to be submitted. HMRC introduced a statutory power (Section 233 and Schedule 51 Finance Act 2013), effective from 17 July 2013, which removes the obligation to file a self-assessment return in appropriate cases (individuals, partnerships and trustees), to withdraw a previously issued notice to file a return and to cancel any penalty for failure to make that self-assessment return in respect of returns for the tax year 2012/13 and subsequent tax years.

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to stoukan
18th Nov 2013 21:25

Thanks Paywatch.  I am dealing with a long-standing client who should not be within self-assessment but still is because he has never filed his returns on time.

I tried ringing HMRC to ask them if they would cancel the 2011/2012 return but they said they could not.  Having read Schedule 51 FA 2013, I now feel I can write to them and request them to at least consider it.

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18th Nov 2013 12:56

Do not forget the sneaky Boxes 2 and 3 on page TR6 of the SA100.  If you put a cross in either of them to say the client will pay any tax direct then you create a problem.  HMRC then say they must keep the client in SA so they can issue Statements and process the resulting demands through the Collection system.

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By help4u
18th Nov 2013 15:43

Can HMRC do this.

If you have full employment details for 2010/11 for the client then i would fill in the TAX Return for that year with his employed income and then the correct assessment will then be made by the HMRC on receipt and acceptance of the tax return. I am assumign that the cleint has received an assessment. Do make sure that the client gives you the correct information with the appropriate evidence so that the information you supply and the information HMRC hold matches. I did have one not so long ago where HMRC did something similar and after a long exchange of correspondence HMRC agreed it was an error on their part. Check name, NINO, address, UTR ref etc..

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18th Nov 2013 23:05

Run that last bit by me again

He shouldn't be in self-assessment at all, but "he has never filed his returns on time". That sentence doesn't stack up. Just how many out-of-date SA returns are we talking about here? The OP indicated a single return that was issued in advance of his entry into the world of self-employment. Now you are talking as if this has been going on for years. Explain please.

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to Slim Freddie
19th Nov 2013 22:35

Run that last bit by me again

Stepurhan, I think you misunderstood.  I was not referring to the OP's problem but one of my own clients who is now PAYE only and has not met the criteria for SA for some time.

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20th Nov 2013 08:02

So why repeatedly late?

@ Homeworker

Sorry, thought you were the original poster.

If your client has not met the criteria for SA for some time, why have they been consistently unable to file on time? Surely a return with no SA triggering income on must be a breeze to complete. No wonder HMRC continue to want a return. They must think anyone apparently not able to keep such simple financial affairs in order must be up to something.

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