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Is HMRC acting illegally?

HMRC powers

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We have a client, we act for the contractor and most of the subcontractors. A lot of the Subcontractors are due refunds because they work for around £10 per hour.

We have resolved most of the issues with HMRC for most of our clients (although we have had some battles) but we have this one case where HMRC appear to be grossly over-stepping their powers and I have no idea what to do about it, other than to complain to the very people who are disregarding the law.

 

We filed four years of Returns showing a total refund of about £4k (client was working with our contractor company for about one year out of the four).

Cut a long story short. Without any form of enquiry, the compliance office has basically removed our Returns and the associated refund claims all of which can be backed up. (Most of the information on the earlier returns has been ascertained from the client’s personal tax account).

HMRC have written to request identity (fair enough, although given they have his bank details and his address they must know his identity). But at this stage can HMRC just disregard the client’s self-assessment returns and amend all to nil. They basically issued a letter and reduced all the returns to nil on the same day. Surely, we have 28 days to reply?

What happened to self-assessment and S9A enquiries?

We can step away from the moral question that someone who earns around £15k per year should have £4k taken off them without any recourse.

All correspondence is going to my client nothing is being sent to our firm as Agents (probably because they have had to back down on 4 or 5 other cases).

What should my firms next course of action be? I really feel that HMRC can do what they like and there is no where to appeal to. 

 

If I was a client and took £4k off the Revenue there would be penalties and interest. How is that HMRC can just take a clients refund with impunity?

Replies (17)

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By paul.benny
14th Nov 2019 07:48

Have you/your clients been through the formal HMRC complaints process as set out here?
https://www.gov.uk/complain-about-hmrc

Notwithstanding the routine appointment as agent, if you are going to do the work, I would get specific written authorisation to act on behalf of the client and submit with any complaint.

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By peterdell
14th Nov 2019 09:19

Thanks for the reply.

We have been down the complaints route on previous cases and I seriously question whether a very biased internal review really gets anybody, anywhere. If it did I wouldn't be posting here after a two year struggle dealing with similar issues on a similar case from the same contractor, which ultimately HMRC have conceded.

The reason for the post was that the powers HMRC have exercised (i.e. the adjustment and cancellation of a Return at their discretion) appears to be a new low in HMRC procedure.

When you have HMRC determining a self employed individual's liability without recourse to the taxpayer or the Agent you think of China and Russia, but now think of the UK because it is happening.

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Replying to peterdell:
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By bobsto12
18th Nov 2019 16:53

This is the problem when state employees are given powers without recourse for any purpose. They will always be used to terrorise law abiding citizens eventually.
The mindset of the state beurocrats is quite shocking when you encounter it.

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By SteLacca
14th Nov 2019 09:28

You always have the adjudicator's office, or judicial review.

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Replying to SteLacca:
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By peterdell
14th Nov 2019 09:37

Thank you. This is what I needed.

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Replying to SteLacca:
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By paul.benny
14th Nov 2019 12:32

That's the next stage of the complaints process.

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By Michael Davies
14th Nov 2019 16:42

Try your MP

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Replying to Michael Davies:
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By paul.benny
15th Nov 2019 11:08

According to the complaints procedure, your MP can refer to the relevant ombudsman - but only after going to the Adjudicator's Office.

(And being pedantic, in the period between dissolution of Parliament and the election, there are no MPs)

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By unearned luck
14th Nov 2019 23:07

Hold fire!

The above answers have been given without knowing all the relevant facts. In particular what tax years are you talking about and on what date(s) were the returns filed? What does HMRC say in its letter? And on the phone when you rang them (you have rung?)?

I point out that HMRC can't and won't process returns received more than four years after the end of the tax year. For example if the returns were filed after 5/4/19 then any that relate to 2014/15 or earlier years are out of time.

If any or all the years are in time then you should be looking at s9ZB TMA and probably not s9A and follow the advice given above.

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Replying to unearned luck:
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By peterdell
17th Nov 2019 04:19

1

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Replying to peterdell:
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By unearned luck
16th Nov 2019 15:47

Twice now you have been asked what HMRC have said in their letter and you haven't said. Why the coyness?

Also you haven't given years and filing dates. I inferred from your post that four year's returns were all filed at the same time. Now you seem to be suggesting that the returns have been filed over at least two years. Again why be coy?

This isn't normal. It's a common complaint that CIS refunds are delayed, but this is something different.

I wonder if HMRC suspect that the returns are an attempt to defraud the revenue and this is why they have 'undone' them. In which they may also suspect you of participating in this conjectured fraud, so tread with care.

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By Ned Ludd
15th Nov 2019 14:48

What does the HMRC letter say?

Does he owe any other HMRC debts? HMRC sometimes take the refund to repay arrears of tax Credits for example or an old class 2 debt.

Has he been bankrupt or in an IVA?

Is this his second UTR?

Knowing what the letter actually says is all important for anyone on here to give you a meaningful reply.

I do sympathise with you as dealing with HMRC is infuriating at the bes tof times.

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By Open all hours
15th Nov 2019 20:39

The four word headline was enough.
My first thought was ‘probably’.
I will now pay you the courtesy of reading your question in full and responses so far.

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By peterdell
17th Nov 2019 04:20

2

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By peterdell
17th Nov 2019 09:24

I have tried to explain the letter and its contents but Aweb have taken down the reply.

In view of the fact the question was answered by SteLacca and others, and there is a allegation of wrongdoing against my firm, which is unsubstantiated and factually incorrect and for which my reply has been removed, I have deleted all posts.

HMRC have acted outside their powers this will be taken to the adjudicator and that should be the end of the matter.

I would like to thank those contributors who provided useful guidance.

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Replying to peterdell:
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By Malcolm McFarlin
18th Nov 2019 10:50

Adjudicator's Office. My experience with dealing with the Adjudicator's Office, albeit a number of years ago, was that they were very slow -18 months to 2 years due to the backlog of cases.

I think I also had to go through the HMRC Complaints review procedure first but I maybe wrong

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By DenholmHay
18th Nov 2019 20:24

Noticing some of the replies.

Have you been to the Adjudicator? We have a client we took over in 2014 where his company paid tax at source under the CIS scheme. HMRC refuse to divulge, to this day, how much he has already paid at source and, as such, want tax on the basis of nothing been paid whatsoever - and the Adjudicator says that's fine. We have had other clients where HMRC refuse to reply to complaints and the Adjudicator's response is - They cannot deal with it as there's been no reply to the complaint. Want a nice fat salary and do nothing for it? - Join the Adjudicator's office.

Have you contacted your MP lately? It took us 6 weeks of frequent communications recently to actually get a reply. The rest was a waste of time. Want a nice fat salary and do nothing for it? - Become an MP.

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