HMRC discrepancies on RTI return figures

HMRC discrepancies on RTI return figures

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I have now had two phone calls from HMRC regarding companies for which I process payroll stating that my month 6 payments do not tally with what is due according to the FPS returns.  They have accepted that, looking back at prior months, it is clearly the 'amount due' which is incorrect, rather than the payment.  Having looked at the HMRC online records for all five companies for which I process the payroll, they all have discrepancies in month 6.  Some almost look as though the year to date figures have been used, although they don't quite tally - one is £70k out on a normal monthly amount due of around £20k.  Has anyone else encountered this issue?  I am using Miracle Lite to process the payroll and every month up to now has been fine.

HMRC tell me that the onus is on me to prove that it is not an issue with my software before they will investigate from their end.  I have manually checked the FPS submission reports produced during the submission process and they all tally with the P32 and the amount that we paid.

Should I wait until the month 7 figures have been processed by HMRC and see whether the situation rectifies itself then?

Replies (35)

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By mickey09
31st Oct 2013 11:38

We recently encountered a similar problem with HMRC who were demanding payment of a shortfall in PAYE, based on an FPS report they claimed we had submitted.for month 3.

It was only after we pressed them to explain how it was possible that they held an FPS report apparently submitted by us, which was totally at odds with the FPS report we held that they admitted there was a  technical issue at their end. Apparently, this has resulted in the generation of duplicate FPS reports and their system is not picking up the correct FPS figures that have been submitted. I was informed that this technical issue has affected a number of employers.

I would be inclined to throw the ball back in HMRC's court.

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By chippyberg
31st Oct 2013 11:57

Flaws in the system

We received a letter yesterday stating they had not received payment for Q2, however on the online portal our balance was nil?  Again, the figure they quoted we owe is one they have seemingly pulled from thin air as doesn't at all tally with the submissions made by me, or with what is online! Aargh! 

In the middle of writing a lovely letter as we speak :)

 

 

EDIT:  Payment was, of course, made on time.

 

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By Wieslaw
31st Oct 2013 12:01

Same thing happened month 2...

We had a similar issue in month 2, effectively the data value YTD figure was used for the month.

After many phone calls, HMRC admitted it was a known issue, and they even advised a fix was in place for 4th Oct.

Clearly there is no fix and we too will now be swamped with irate clients and more time and money being wasted trying to get some sense from HMRC.

Like you our FPS (including the XML data sent via software) was not the same as what they suggested was submitted.

1. They blame you for sending the wrong data (if that fails)

2. They blame your software provider (if that fails)

3. They admit they have a problem

Why they cannot just put their hands up and say yes we have a problem, and save us all wasting time and money!!

 

 

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By bendybod
31st Oct 2013 13:07

Thanks everyone.  I suspected

Thanks everyone.  I suspected this was the case.  I'm so glad I got out of working in practice just before HMRC started raising queries over RTI - 7 or 8 companies is quite enough to deal with.

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By DMGbus
31st Oct 2013 13:40

Wrong FPS figures

In one case HMRC overstated a month's liability by an amount equal to the tax deduction from one employee.

HMRC put it right after two 'phone calls and a letter.  No explanation given.

For this to happen it suggests that there is something wrong at HMRC end, especially when the FPS was printed out and showed correct figures prior to submission.

HMRC have since issued a report denying responsibility for online liability errors inferring that third party payroll software is to blame.  I do not believe this and I suspect that the report was written not by independent IT experts (= really needed) reviewing HMRC's systems for recording FPS liabilities but rather by HMRC's own IT partners.

There have been spurious between-months allocation of payments made too, despite evidence to show correct month allocations specified at the payment stage by the employer.

My guess is that HMRC and its IT partner(s) are glad that the errors only affect a minority of employers as they clearly haven't got a clue how to fix the problem as they are "in denial".

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By Kate Upcraft
31st Oct 2013 18:44

a minority - I wish

Sadly there are by HMRC's own admission 1% of employers affected by the duplicate records issue where HMRC corrupt the FPS based on the flawed design of RTI. Even 1% is 2000 schemes and they only admit to 1% at present as these are the self-selected 'underpayments' they have followed up so far. Now that the Generic Notifications Service is in place (that agents can access unlike the liabilities and payments viewer that only employers can see), I hope that the true scale of the issue with the flawed design of RTI will become clear that is leading to major reconciliation problems and worry for agents and employers alike. We know so far that duplicates (where the YTD figures are added in twice are caused by amending a start or leave date, payments after leaving and amending a DOB or gender - all commonplace payroll scenarios. On no account pay any monies over if you haves the FPS figures and they tally with the remittance paid. As for the matter to be referred to the disputes team at DMB, it usually then goes into a black hole for most of my clients for at least six months!

 

 

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By arandall
04th Nov 2013 12:36

Online account wrong

I have had discussion with HMRC recently as our online account was showing a balance owing, which I knew to be incorrect.  When I spoke to them, they confirmed that the account on their records was showing up to date and clear.  They referred me to their technical team, who deal with the online account.  They checked the FPS and EPS, all confirmed as received OK, and our account clear.  They had no explanation why the online account was showing a balance due (Which, incidentally, I knew to refer to an EPS)

So, I hope it will get sorted out, but they didn't seem to be bothered by it and neither intended to take any action on it.

I have another company, which I know is also wrong.

Haven't received any letters, so should I worry?  Will it get sorted by the year-end?

 

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By Mike Nicholas
04th Nov 2013 13:33

Duplicate records

HMRC have said there is nothing amiss with the way in which their system calculates the values passed into its debt management system. But, of course, garbage in, garbage out – much depends on what data HMRC is using for their calculations.

 

A significant issue is the duplication of tax payer records by HMRC’s system. There are various causes of these duplications, and I believe most are attributable to the inadequate matching processes/programming.

 

It is not (yet) known whether HMRC’s recent system ‘upgrade’ has eliminated the various inadequacies. Hopefully it has.

 

The reconciliation issue reveals in my opinion an appalling design error, as there is no provision within RTI for HMRC and employers to ‘agree’ the tax etc due. The Annual Return was the perfect process / return enabling HMRC to accurately identify and confirm the tax etc due. I think something along the lines of the P35, perhaps every month or with every set of FPS files is needed – and should have been present from the outset of RTI. Clearly HMRC did not foresee the reconciliation issue.

 

In the event that HMRC and employers cannot each agreement about the tax due, there is I believe provision within the PAYE regs for employers to ‘demand’ HMRC visit them and inspect their payroll records. Usually a visit by HMRC is undesirable but perhaps for those confident enough this option may be considered.

 

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By Kate Upcraft
04th Nov 2013 13:46

bassett1

Mike

I am well aware of a payroll manager of a large NHS Trust (that we both know) who has said exactly that to HMRC: 'send in your compliance teams as I don’t intend to pay and I balance to the penny every month'. The vast majority of employers will be absolutely confident in what has been sent and what has been paid. No one should simply pay up based on these calls and/or threatening letters (of which I have copies); the sad thing is small employers without agents may do just that.

 

 

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Replying to bernard michael:
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By Mike Nicholas
04th Nov 2013 14:19

Inviting HMRC to audit payroll records

I think where no agreement can be reached, inviting HMRC to audit the payroll records must be considered. If enough employers (and pension payers) were to do this, HMRC would quickly find another solution. And were HMRC to visit and discover the cause of discrepancies lay within the payroll software being used, this would surely enable the employer to seek compensation from the software provider?  

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By bbd99
04th Nov 2013 14:20

SLD Deductions

I am getting similar letters.

It may be a similar problem but the HMRC agent I spoke to says that my payroll provider has omitted the YTD cumulative figure in their RTI return for Maternity pay resulting in a liability each month. 

They use Sage Payroll and say that everything looks fine at their end.

?

 

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By Payroll-Seago-and-Stopps
04th Nov 2013 14:25

Online Descrepancies

Two of our Payroll Clients have had "issues" with RTI and received letters from HMRC that potentially could cause lots of problems at the year end.

Client 1 : received at Debt Management letter on 17th September requesting payment of £307.02. They forwarded it, from Hong Kong, to us as they were concerned, being a Queens Council this could be seriously harmful to his reputation ! We process the payroll and make payments to employees and make the necessary HMRC payment and thus, knew this could not be correct. On contacting HMRC the confirmed that they had a credit of this amount "sat there" and they would "re-jig" the payments to ensure this is allocated. (Words in "" are HMRC's actual words used).

Client 2 : received an overpayment notice dated 24th October advising they should reduce their next payment by this amount. However, the RTI submission for month 7, submitted on 10th October, was not showing on the clients "At a Glance". We contacted the Employer Section of HMRC and was advised that their system updated on the 6th and the 22nd of each month. How then, we asked can our submission of 10th October not have been updated prior to sending the overpayment notice of 24th October ? No answer was available and we were advised to check again on the 7th December. We imagine that there could be several employers out there that would see an overpayment notice, think yippee and reduce their next payment to HMRC without any further checking. At the year end an underpayment will be demanded - those employers are not going to be very happy then..............

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By bendybod
04th Nov 2013 16:15

Mike Nicholas, you may have hit the nail on the head.  Last month, or maybe the end of month 5, I had an issue because I changed the start dates (because they'd been set up wrong) for all of our employees who had joined the companies at formation (under TUPE).  Their start dates had incorrectly been set up as the original start dates of the old company, thus implying that they had had multiple employments in prior tax years, which I feared could lead to underpayment notices getting issued all over the place.  I contacted HMRC and asked them what I should do when I discovered the error.  The reply was 'just file the FPS next period with the corrected dates and there should be no problems'.

The next morning I received a whole raft of W1/M1 tax codes, which took me a fair while to sort out and was put down to duplicated records - where their system had set up new employments for these employees with the same company as their current employment.  Eventually it got 'sorted' and the tax codes were reset to the appropriate ones, I was told by deleting the duplicate entries.  Maybe there is some hangover from that issue that has caused the current issue, although the figures in question would still be too large to just be one duplicated period.  It might well be duplicated year to date figures for the affected employees, though, which would explain why for a couple of the companies, where the workforce has been reasonably stable, the discrepancies appear to be almost the whole year's liability whereas some of the other companies, which had a small number of employees to start with and have built up, have a much smaller discrepancy.

I should know by now that I should never trust 'there should be no problems' when uttered by an HMRC employee.  It's bettered only by 'do what you think is best'!

The standard response to everything at the moment seems to be that everything will correct itself when you submit your next FPS.

Now to figure out how to sort the whole mess out, or whether to leave them to their internal investigating and see whether they come back to me later in the year.  I can guarantee that I will be public enemy number one here if I invite HMRC for a visit!

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By eddie the eagle
04th Nov 2013 16:44

If it's not in writing ... they didn't say it.

And if it is in writing you probably didn't explain clearly enough

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By Jon Darlington
04th Nov 2013 21:31

So what happens next April?

Like others I have a client who received a letter stating an underpayment was made - in their case month 3 for some £300. The FPS was submitted and paid. I cannot see where HMRC get their figures from. So it needs sorting out, but what happens next year when HMRC start issuing penalties? How many of these spurious discrepancies would have resulted in a fine if they had occurred after next April? OK perhaps the system will be fixed by then, but perhaps not. I for one am not going to worry about it - because I am getting out of doing payroll. Frankly, I am tired of over regulation and being forced to comply with ridiculous nonsense like this. Doing submissions on or before the payment date is almost certainly unnecessary; a single submission due by the 19th of the following month would surely have been up to date enough - and would probably have given rise to less problems.

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By Kate Upcraft
05th Nov 2013 14:25

There is no indication that duplicate records will be sorted next April or in any April in the foreseeable future! HMRC have designed their RTI processes on the basis that if there is a slight change in the identity details of an employee from one FPS to the next they create a duplicate record (plus all sorts of other reasons that we are only just stumbling across) even though having two jobs with the same employer at the same time is hardly the norm! We know is occurs when a start date, leave date, gender or DOB changes so absolutely the change of start dates mentioned above will have led to duplicates ( what a pity that HMRC staff gave out the stock answer "it will be fixed on the next FPS "- it won't ) . Duplicates are very serious because they inflate the employer's liability for the year by adding the employee's YTD tax, NICs and student loan values in twice and only HMRC 'technical staff' can delete them., they also as pointed out lead to BR codes being issued for the employee.You will spot a duplicate if your figures on the liabilities and payments viewer bear no relation to the combination of the FPS and EPS for the month in question and yes failing to submit YTDs for statutory payment recoveries on any EPS submitted for the tax year and submitting this period value will lead HMRC to think you have underpaid. Timing of the EPS is vital too, it must be sent between 20th and 19th if it is be applied to the correct month, so a month 8 EPS must not be sent until 20th November or it will be applied to month 7 as there is no tax month field in the EPS even if your software implies it will send send tax month - it can't! This is not being fixed either. Keep checking the new generic notifications and your liabilities and payments viewer to get all discrepancies investigated before April as it will be much harder to get HMRC to act once automated penalties start to be issued

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By Mike Nicholas
05th Nov 2013 14:42

The effect of duplicated records

The effect of a duplicated employment record being created in HMRC's system is as follows. Note firstly however that HMRC have very recently altered its guidance on how employers (and pension payers) should calculate the tax etc due for a tax period, to accord with the legislation!Yes, originally HMRC were giving guidance that did not accord with the legislation even though its systems do calculate the amount of tax etc due in accordance with the law. The tax etc due is to be calculated by identifying the movement in the YTD figures from the previous period to the current period (with particular rules for the first period of the year). So, if in tax month 6 HMRC creates a duplicate record for an employee its system will treat all YTD values on that record as arising as due in the current tax period...even though some 5/6ths of it may well relate to the earlier months and also be held on the original record (which is still valid and operational). As you can see, it is not simply a single month's tax etc being duplicated, but potentially an entire year's figures. As the tax year progresses the impact of duplicated records will become very significant. Anyway, hopefully the vulnerability in HMRC's systems to duplicate records has been eliminated by the October upgrade. I'm sure we'll learn soon if this is not the case.

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By Mike Nicholas
05th Nov 2013 14:36

Snap

bassett1..Hi - you typed quicker than I did!

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By bendybod
08th Nov 2013 14:08

Apparently the vulnerability hasn't been fixed if I have incurred this issue during October, although arguably the situation arose the previous month.

At least they have changed all of the affected tax codes back to the correct ones - after several phone calls and determination not to be fobbed off by 'you need to speak to the Employers' Helpline'.  No, I don't.  Apparently they have also referred all five of my affected companies to their technical bods and debt recovery have noted that they are in dispute.  As far as I am concerned, so long as my employees are not being inconvenienced by it, which they aren't any longer, HMRC can take as long as they like to sort the rest out as I have no intention of paying them a penny of the £150,000+ that they claim is owed.

My main advice to any other small business in the same situation is that if you suddenly get amended tax codes after you make a change and submit an FPS then phone the taxes helpline and get them to change the codes back again.  They will tell you that they can't; that they can only change certain things without the taxpayer present, etc, etc.  However, on every occasion, when I have finally got them to listen to what is required, they have accepted that they can do it.  Watch out for discrepancies on your account at the following month end and throw it back to HMRC to investigate if you are sure you have submitted everything correctly, including EPS returns, and reconciled what is owed with what has been paid.

Perhaps I should set up in business as an RTI consultant.  Shudder!!

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By bendybod
14th Nov 2013 14:13

The latest in this saga is that I got a phone call from HMRC this morning to say that they'd discovered that the problem on a particular company is that I am reporting the same employee with two different tax codes.  I was told that I needed to omit this employee from my FPS report this month and that this would 'solve the problem'.  When I pointed out that I couldn't omit the employee because he is still employed by us and is only appearing once on the FPS return that I'm submitting, I was told that it was my software provider's problem because HMRC's system can't duplicate employees.  When I told him that that was a load of rubbish and that it's well known that HMRC's software duplicates employees, he got upset and told me that he'd given me the solution and that if I wasn't going to act upon it then the error would just keep occurring and I'd keep getting chased for the 'debt'.  I said it had been investigated this end by myself, my IT manager and the software company but HMRC still refuse to accept that there is an issue with their systems.  If just changing the tax code is enough to generate a problem then this is a much larger potential issue than if it were just happening when something like a start date gets changed.

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By Mike Nicholas
14th Nov 2013 14:39

It's almost an arcade game

For a while I've thought that the problems with RTI are somewhat similar to an old arcade game in which the player has a mallet that he must deploy as rapidly as possible to hit the next one of ten or so heads that briefly emerges and then returns to its resting place. One can get so much enjoyment from this game, and it relieves one's anger and frustration.  

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By Kate Upcraft
14th Nov 2013 15:00

Maybe just maybe we are getting to tipping point
Was at a meeting of large employers and pension providers yesterday, around 80 people, and the vast majority have reconciliation issues so it was good for HMRC to get very vocal and en masse feedback about the effect on employers, agents and taxpayers. Sadly of course it wasn't DMB who were there to hear the effect their interventions are having based on the fact that flawed data is being fed into the liability calculation. The generic notifications of underpayment are due to go live very soon now they told us so let's hope that increased visibility gets the issue escalated within HMRC and the wider government

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By Mike Nicholas
14th Nov 2013 15:23

Large employers

Bassestt1...are any of these large employers those who started RTI in the period July to October?

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By Kate Upcraft
15th Nov 2013 17:53

Large employers
I imagine so Mike as that was the large employer window and only a few were in the pilot like prudential for example

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By bendybod
15th Nov 2013 18:18

I started the task of reconciling the differences today. One company I have discovered that the error has been corrected in month 7. One has been corrected for two out of three affected employees. One has not been corrected at all and I can't absolutely nail down the difference yet, although I'm only £280 short on a £15k difference. The other two are larger and will take longer to sort out on Monday. I'm determined that when they next contact me that I will be able to tell them what the issue is - and demonstrate that it is possible for them to correct it as they have evidently done so in part or in full on some companies.
It's very satisfying to be able to tell HMRC exactly what the issue is comprised of so they can't wriggle out of responsibility.

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By DMGbus
15th Nov 2013 21:51

Employers Office vs Collector of Taxes (RTI design flaw)

There is a  design flaw in HMRC's RTI set up at the HMRC end.

I would like to think that this was fixed last month (or maybe might be fixed on the forthcoming 19th November@2100hrs online services closedown).

The flaw is that Employers Office are able to see the breakdown and agree submitted FPS data whereas Collector of Taxes can only see a total figure that might be a different figure - in one case that I had the Collector Taxes figure was £60.50 too high - which just happened to be the first employee's tax deduction.

I wonder if there's some manual keying in going on at HMRC end in transferring data to Collector of Taxes, hence the potential for error.    It reminds of the situation prevailing some years ago with Trust tax returns - if submitted online HMRC had to print them off then manually input the data into its system - allegedly the problem arose from their IT partner of the day demanding an extra fee to make the submitted online data get posted into the system!  This issue, I understand, has since been fixed (IT partners got their extra fee I presume!).

 

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By bendybod
15th Nov 2013 22:00

The flaw might be corrected but how long before the figures are? As the three companies I looked at today prove, one has been, one hasn't been and one has partially. That suggests that either there is some manual effort involved or the update hasn't completely solved the problem. I'm riding it out to see what happens in the long run but in the meantime am wasting time reconciling this when I could be doing other work.

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By Snowy13
23rd Jan 2014 06:58

Relief

Such a relief to find others having such horrendous problems.  At month 8 and 9 the FPS figures sent by me differ from what they seem to have received. Have spent 5 hours on the phone to the helplines and impossible to get anyone to really listen.  I have now written to them and included print offs of all Full Payment Submissions.  I expect month 10 will also be incorrect.

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Replying to Accountant A:
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By Mike Nicholas
23rd Jan 2014 07:44

Retaining FPS data files

Snowy, at least you have retained and can access the FPS data files previously sent to HMRC. Not all payroll software retains the files.

There is also another HMRC IT [***]-up which affects month 8 figures I believe. This may well now be affecting hundreds of thousands of PAYE schemes.

And we can all look forward to April when the Employment Allowance becomes claimable. If things are bad now, they will get much worse when employers begin reducing their monthly or quarterly remittances. 

 

 

 

 

 

 

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By bendybod
23rd Jan 2014 07:37

Still fighting
I think I may have to send it all in in writing too. They're chasing me again to sort the problem out, insisting that I need to change my year to date figures. When I said I can't do that because my figures are right, they told me I need to speak to my software support people and find out how to do it. They flatly refuse to accept that it's an issue at their end.

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By bendybod
24th Jan 2014 22:09

FPS returns
They told me that the fact that my FPS returns and my P11s are correct is not evidence that my year to date total is wrong and that my software provider should be able to tell me how to change my year to date figures! I can't get through to them that my year to date figure has to be the sum of one or the other - and that it's actually the total of the FPS returns - which they've duplicated by duplicating employees. It's still my fault though, apparently.

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By Kate Upcraft
25th Jan 2014 15:33

Next step is the disputed charges team
The operator you are speaking too clearly has no idea how HMRC 'a accounting system ETMP works - no surprise there as most people in HMRC have no idea. You need to ask the employer helpline to refer the case to the disputed charges team in DMB who have been in existence for over six months . They are supposed to be able to suspend compliance activity once the scheme is in dispute but with the mount of bailiffs turning up at premises on the back of incorrect underpayments in the last week alone none of us believe they can stop the compliance juggernaut even though it is all predicated on incorrect data as YTD records have been Duplicated.

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By bendybod
25th Jan 2014 16:01

Thanks
Thank you for that. So far compliance haven't got involved and it may be that when they talked about referring my cases on in the case of two of my companies that this is what they were referring to but I will definitely phone this week and find out for all of the companies.

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By bendybod
29th Jan 2014 16:26

Left hand v right hand

Phoned HMRC today.  Apparently all of my affected companies were passed to disputed charges on 31 October when I first contacted them.  When I asked how long I should expect to wait for a reply the person said that originally it had been six weeks but now it is indefinite!  When I asked how come I'm getting some pretty stroppy phone calls stating that I should have attempted to resolve the issue from my end by now, he said that I shouldn't be getting any calls regarding it and that I can refer them to the notes on my files.  Hmm, we'll see how much that does!

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