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HMRC Exclusion 90

HMRC Exclusion 90 and failure of software to calculate the tax correctly

The practice uses Sage for the preparation of personal tax returns.  For 2017/18, there is an issue in the way that the personal allowance is being allocated between savings income and dividends.  This is covered by HMRC exclusion 90.

What is frustrating is that the software works well up to a point but after a certain dividend level, the allowances are incorrectly allocated! This is further annoying when it worked correctly for the previous tax year!! Sage's response is that "the software is compliant with HMRC and we are not accountants" - which does not help whatsoever and only adds to the frustration!!!

Has anyone else experienced this issue with any other software supplier or have the other software suppliers managed to get their systems to do the job properly?

My renewal is coming up and I am considering looking around at the other providers after being a loyal customer for 18 years.

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09th Nov 2018 14:51

That's very poor, though not exactly unexpected from Sage.

I suspect that most commercial software will not only give the correct answer but also highlight the exclusion. Certainly my software does, and if it didn't I would be insisting they put it right.

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09th Nov 2018 15:07

Software's always right.

Some HMRC lass said so in a House of Lords Committee a couple of weeks ago, so it must be so.

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By frankfx
09th Nov 2018 15:39

Tim Good fully addressed this in Taxation magazine.

The software houses are compelled to produce erroneous results.

HMRC then correct much later.

You can advise client of the methodology.
Will he pay your time costs for getting him back into his chair?

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to frankfx
09th Nov 2018 15:59

frankfx wrote:

Tim Good fully addressed this in Taxation magazine.

The software houses are compelled to produce erroneous results.

Rubbish. Most software produces the correct results. The only proviso being you have to file the return on paper.

Far better than waiting a year for HMRC to correct the online version and have the client chased for tax they do not owe. Just because some software houses are too lazy or incompetent ("we are not accountants" indeed!) does not mean that the client should not expect the correct results. The simple answer is to buy decent software in the first place, not rubbish sofware that just copies the HMRC mistakes.

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to Tim Vane
12th Nov 2018 11:48

If software doesn't follow HMRC calculation method it won't be approved by HMRC for SA, or it will lose it's approval for the year it departs from HMRC's calculation - that's a fact.

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By frankfx
to Tim Vane
12th Nov 2018 13:47

Tony Court confirms the software house dilemma.

I am not aware of a software house that provides the alternative ……….. technically correct tax calculation.

Which ,theoretically, will agree with your own internal/ excel workings. And provide a measure of assurance that your own tax liability calculation is correct.

Clients may willingly pay a premium fee for this re- assurance? !

Once again, please refer to Tim Good's recent article in Taxation magazine

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09th Nov 2018 16:32

"Sage's response is that "the software is compliant with HMRC and we are not accountants" "

That's an absolute cracker coming from a major accounting software house (and payroll provider and and and....)

I wonder if they've realised what they have said? :-)

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to paulwakefield1
09th Nov 2018 17:07

Made me laugh, any road.

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13th Nov 2018 09:17

Hi Wayne,

In order to attain HMRC accreditation, and to allow submissions to be approved, software vendors are required to programme their software in-line with HMRC’s filing specification.

In this instance, the approved calculation returns figures that would appear erroneous when validated against the pure-calculation values.

Whilst we appreciate that this could appear to be poor programming, it is specifically designed to return these results to allow for successful submissions. Once submitted, exclusions must be processed in line with HMRC regulations.

Regarding this particular return, were Sage to produce ‘correct’ figures, the submission would not be accepted on the gateway and furthermore the software would not receive accreditation.

Regards,

Paul
Sage UKI

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