How can a timid widow stop HMRC sending threats?

She isn't eligible for online returns, and HMRC input details from her paper return incorrectly.

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An elderly, recently widowed lady living in a care home is receiving frightening demands from HMRC.  She receives a pension from the Netherlands, taxed at source.  She's entitled to Double Taxation Relief in the form of Tax Credit Relief, effectively deducting the Netherlands tax from her UK tax bill.  Because of this overseas income, she has to complete a paper tax return every year, and for the second year running, HMRC have failed to deduct the Tax Credit Relief.  In inputting the details from her return, they apparently overlooked the tick in the box claiming TCR.  The result is to push her self-assessment bill over £1,000 and thereby liable to make instalment payments in addition to final payment.  She's already paid the correct amount in good time, but is receiving threatening demands for over £1,500 which she doesn't owe and can't afford.  HMRC don't answer the phone and they take months to deal with letters.  This doesn't stop their computer keeps spuing out incorrect demands.  She's sick with worry.  What can she do?

Replies (23)

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By Cazzie B
08th Apr 2024 16:47

https://www.gov.uk/guidance/agent-account-managers-in-hmrc

Register for this and try them, usually sorted within 2 days

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By Paul Crowley
08th Apr 2024 18:06

She is eligible for online returns. She may have her own reasons for operating in paper.
Does she have nobody at all that can help?

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By rmillaree
08th Apr 2024 19:01

its easy to blame hmrc here but are you 100% certain that all the necessary boxed have been completed - i would start by getting them to admit it was their fault and apologise presuming that is the case.

I would 100% recommend online submission

stuff like this is why mp's exist imho

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By K81
08th Apr 2024 19:01

Should she be paying tax in Netherlands, what does DTA say?
It may be that the pension is taxable in country of residence, so HMRC are not allowing the tax credit.

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By More unearned luck
08th Apr 2024 19:20

Should the pension be taxed at source?

The default treatment in the Netherlands/UK treaty is that pensions should be taxed only in the country of residence , but there are exceptions and exceptions to the exceptions.

So the disallowing of TCR might be correct. If it's not then she (or her agent) should have objected to HMRC's computation in writing shortly after it was issued.

If the pension is only taxable in the UK then the Dutch tax authority needs to be contacted to stop Dutch tax being deducted and to get a rebate of past deductions, in as far as the Dutch tax code permits. If not all tax can be reclaimed then HMRC might give unilateral relief.

The lady needs a good accountant (and that obviously rules me out).

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Replying to More unearned luck:
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By Tax Dragon
09th Apr 2024 11:08

"If not all tax can be reclaimed then HMRC might give unilateral relief."

TIOPA (inc s33) contains many a "must not"; even if HMRC felt inclined to be kind, I'm not sure the law would allow.

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Replying to Tax Dragon:
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By More unearned luck
09th Apr 2024 15:29

Proof positive of my final remark.

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Replying to More unearned luck:
By JCresswellTax
10th Apr 2024 09:52

She is probably better seeking a tax adviser than an accountant.

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By Paul Crowley
08th Apr 2024 21:10

The cost of an accountant to sort it would be a logical move forward if nobody else will help her get this sorted. I presume she has no family.

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By SkyBlue22
09th Apr 2024 11:43

Assuming the form was completed correctly, I would first appeal the penalties and ring HMRC to tell them you are appealing. Next, I would put in a complaint about them inputting the data wrong as you actually get someone responsible to managing the case until its end.

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Replying to SkyBlue22:
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By Tax Dragon
09th Apr 2024 11:53

No-one has mentioned penalties - this appears to be tax, which tax is probably correctly due.

If there are penalties then yes consider appealing.

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Replying to Tax Dragon:
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By SkyBlue22
09th Apr 2024 16:30

My mistake. Complaint may still stand though.

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By Matrix
09th Apr 2024 11:51

How was this resolved last year? Do you have PII?

I would be absolutely sure on the tax credit position before acting further. Per above, she needs to take UK tax advice.

If she needs to reclaim the Dutch tax then there are firms who can help with this and it would help her cashflow for paying HMRC and advisers.

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By [email protected]
10th Apr 2024 08:41

Many thanks to all who've contributed.

Last year, after months of harassment, she panicked and paid up in order to put a stop to the demands and to be able to sleep at night. Eventually (months later and after she'd sent them several letters), HMIT refunded in full. She has recently granted power of attorney to a friend, but HMIT have yet to acknowledge it and are still sending all correspondence to her in her care home (in UK where she lives). This year, a letter pointing out HMRC's error was sent to them the moment their incorrect calculation was received. Four months later, HMRC's only response has been computer generated demands.

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Replying to [email protected]:
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By Tax Dragon
10th Apr 2024 11:19

That doesn't persuade me that the treaty doesn't eliminate the overseas tax charge.

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By [email protected]
10th Apr 2024 14:13

Great news hot off the press. HMRC finally answered the phone a little while ago and immediately corrected their error. Her tax account now shows she owes nothing.

A few years ago when her husband was alive, they were advised that because of their overseas pensions, they weren't eligible for online tax return submission as HMRC software couldn't handle it. In light of answers to this post advising it CAN now be done, this should solve the problem going forward. A preliminary search today suggests that respondents are correct in saying she can file online.

Again, many thanks to all who took the time and trouble to respond.

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Replying to [email protected]:
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By More unearned luck
10th Apr 2024 14:51

I'm surprised that the call centre officer agreed that the Netherlands could tax the pension, this is the sort of issue that call centre staff normally refer to more senior staff. On what basis was credit relief given?

Tax is complex. International tax more so. So making an error out of ignorance is understandable, but not when you have been put on notice that there could be an error, if you are perpetuating an error.

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By [email protected]
10th Apr 2024 16:49

As you say, it's complex. When they moved back to the UK over 20 years ago after many years in Holland, husband had three Dutch pensions and wife had two, as far as I can recall. Netherland authorities agreed that four of the five could be paid without deduction of Dutch tax as they were now resident elsewhere. So those pensions were reported on Tax Returns and taxed in UK. HMRC looked at the paperwork in detail at the time and agreed to the TCR claim in respect of the Dutch tax on the fifth, which was the wife's larger pension. So, right or wrong, it's been done that way ever since.

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Replying to [email protected]:
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By Paul Crowley
10th Apr 2024 17:00

There is the problem.
It is an exception. Difficult to blame the poor HMRC operative for not knowing.
File electronically is the solution.

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Replying to [email protected]:
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By More unearned luck
10th Apr 2024 18:00

Why didn't you say so earlier? If you mentioned this in the question then respondents wouldn't have wasted time suggesting that HMRC might not have been in error.

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Replying to More unearned luck:
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By I'msorryIhaven'taclue
11th Apr 2024 10:51

Why didn't you ask earlier?

That's half the fun, drawing out the relevant facts of the case ;)

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Replying to I'msorryIhaven'taclue:
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By FactChecker
11th Apr 2024 13:11

It may be just a game to you mate, but it's life and death to some poor wretch!

... with apologies to Anthony John Hancock.

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Replying to FactChecker:
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By More unearned luck
12th Apr 2024 19:46

There was me thinking that his middle name was Aloysius. Serves me right for mixing up the character with the actor.

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