How far should we go trying to pay tax?

HMRC reject amendment to pay more tax

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Hi, just wondering what the position is regarding my issue below from an ethics standpoint.

I wrote to HMRC last March 2023 to tell them a client’s 2019/20 tax return needed to be amended for Excess Pension Charges of approx £2k that had been omitted from the submitted return (client submitted it themselves). I finally received a reply dated 3 November 2023, apologising for the delay, and asking for the amount of contribution in excess of the annual allowance. I replied immediately with the figures. I have now received another reply from HMRC. Their letter is completely wrong and appears to have been written by a very junior person. It says the deadline for amending the return was 31 January 2022. This is incorrect, that is the deadline for amending it online. After that date HMRC’s own guidance says to write a letter instead. They have then completely misread both my letters and their own colleagues letters, and thought we were trying to claim a tax refund, not make a payment. They have further compounded this by saying that we’ve missed the deadline for a claim because that was 31 January 2025. They end by effectively saying they have closed the case. I am dumfounded by the level of incompetence and lack of supervision of someone who sends letters out not knowing what they are doing.

I’m not sure how to approach this. On the one hand it seems innocuous to have to write back and make an issue of the fact that HMRC have officially turned down our client’s attempt to pay more tax. On the other hand, I would not want a more senior tax official to pick it up and correct it at a later date and then issue them with penalties. I expect they would say I knew it was wrong and should have told them.

What do you think?

Replies (14)

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By 356B
05th Dec 2023 16:19

You've got evidence that you raised it with HMRC so a "discovery" is unlikely, but just to cover your backside write and explain the position (politely, of course).

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Replying to 356B:
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By richard thomas
05th Dec 2023 16:32

Trouble is that raising it after the end of the enquiry period does not prevent a DA - s 29(5) TMA.

And late payment penalties will have accrued, though there are time limits for HMRC making any penalty assessment, which most HMRC officers, even presenting officers before the FTT, do not know about.

And interest will be running until payment, so the client might be advised to pay the tax (and keep full records of the payment in case it goes astray, not being related to any charge to tax in being)

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paddle steamer
By DJKL
05th Dec 2023 17:12

I think your client probably ought to deliver to HMRC a Negotiable Cow to settle the balance, that or a cheque in a bottle.

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By frankfx
05th Dec 2023 17:34

Suggest to client that he may want to ask his MP to get involved.

The outcome to date may the result of effeciency savings at HMRC !?

More to follow, it would seem, from the Autumn Statement

The tax payer was
un represented when original return was submitted.

Took your advice to amend return, then finds he is incurring fee costs for you to explain why HMRC response is incorrect.

Moreover client can not rely on that Official HMRC letter.

Please keep us informed of progress.

Thanks (1)
Ivor Windybottom
By Ivor Windybottom
05th Dec 2023 17:43

You're not alone.

Just seen a somewhat similar case where the incompetent or lazy HMRC person has suggested we are out of time for overpayment relief, while we are reporting additional income (which they also acknowledge in their letter).

Trying again to get certainty, but as each response takes months there is a good chance some tax will become out of time to collect.

Hey ho!

Thanks (1)
Replying to Ivor Windybottom:
Small Dog's RAT Return
By Oldmanwetmix
06th Dec 2023 12:59

We have the impression that some at HMRC just send out rubbish so they can say they've dealt with it and meet their targets?

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Intercity
By Mr Hankey
05th Dec 2023 18:35

With the £585 million they are getting from Entain to settle the bribery inquiry, maybe HMRC can take it easy for a while.

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Replying to Mr Hankey:
Small Dog's RAT Return
By Oldmanwetmix
06th Dec 2023 12:56

That gamble didn't pay off then, lol.

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By Truthsayer
06th Dec 2023 09:55

You have told HMRC everything and have irrefutable evidence of that, so if they drop the ball, that is their problem. They can issue no penalties for any time after you told them the information, even if they ever pick the matter up again, which is vanishingly unlikely.

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Replying to Truthsayer:
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By possep
06th Dec 2023 14:51

I suspect that they could issue penalties. The tax paid is known to be wrong.

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Small Dog's RAT Return
By Oldmanwetmix
06th Dec 2023 12:53

Thanks to everyone, client has decided he wants to pay the tax and has transferred the money plus estimated interest to HMRC. I can understand how they got it wrong, given the delays in actually receiving any information from the public sector pension scheme during covid. They came to us as soon as they realised there was an issue. Before that it was a simple higher rate tax return. In the meantime I've written another letter while I was on hold to the Agent Dedicated Line, pointing out the difference between a tax charge and a reclaim.

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By More unearned luck
06th Dec 2023 20:22

"It [a letter from HMRC] says the deadline for amending the return was 31 January 2022. This is incorrect, that is the deadline for amending it online."

It's the deadline full stop (S 9ZA(2) TMA 1970). This is why HMRC's guidance says to write a letter. If the SA overstates the tax due (or understates a refund) then the taxpayer makes an overpayment relief claim (sch 1AB) and if it understates the tax due (or overstates a refund) HMRC issue an assessment under s 29. As Richard says says in this case s 29(5) validates the assessment - if HMRC issue it before 6/4/24.

Penalties for careless errors can be suspended.

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By snickersinatwix
07th Dec 2023 09:19

I have THREE of these outstanding where we have tried to get HMRC to collect extra tax. Two letters sent in last autumn and one this April. Two are for excess pension contributions and one is a simple error correction.
I then had a panic and through maybe I should have gone down the disclosure route, but it is comforting to see that others have also tried writing in to HMRC and hitting a brick wall.
I did also recently have HMRC reject an overpayment relief claim, where we were claiming a refund, that we sent in on time two years ago, which they batted back and forth and kept telling me it was out of time. It was when we sent them copies of what we originally submitted, but it was not when we first submitted it. In the end I submitted a formal complaint and they agreed with me and our client finally got her refund!
I don't think they understand overpayment relief claims.

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By tonyaustin
08th Dec 2023 16:54

Write to Penny Ciniewicz 100 Parliament St, London SW1A 2BQ, enclosing copy correspondence.
(see https://www.gov.uk/government/people/penny-ciniewicz )

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