Client's 2012/13 POA's were set following submission of her 2011/12 Tax Return (submitted on time).
Client then goes AWOL for a number of years, until she gets back in contact again recently saying that she's being chased by HMRC for tax for 2012/13 (her unpaid Payments on Account - doh!). It turns out that she became employed in 2012/13 and so no further tax is due (her 2012/13 payments on account total £4000'ish). HMRC will not accept her 2012/13 Tax Return because it is out of time, so they can't displace the POA's, nor have they made a Determination (so Special Relief will not apply). It is obviously too late to retrospectively claim to reduce the POA's.
I don't know what other options are open to her. I've looked at the Higgs case which would have provided assistance were it not for HMRC closing this 'loophole' in 2016.
Has anyone come across this situation before and managed to overcome it?
Thanks.
Replies (18)
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Was there absolutely no income other than paye in 12/13?
I don't have expert knowledge in the area of POAs but has the question been put to hmrc that your client was in employment in that year and so POAs would have beeen refunded? Ask exactly where payments on account will be allocated since there were no other taxable income?
It seems ludicrous to me that they can demand POAs for a year in which they are being told the only income was taxed at source.
Sounds to me like they are wanting to pocket the interest which would become due then, Because in theory if it was paid, a repayment could be requested shortly after but the interest would remain owed, or rather offset the repayment.
Really shocking. Take me back to the days where you could squash things like this based on there being no actual loss.
Can't she notify HMRC of some (small?) undisclosed liability for that year so that HMRC then have to send her a notice to file a tax return. From memory the FTN penalties are tax geared and the late filing penalties from that year may be less than the POAs. (If she was sent a 2012/13 notice to file then I can't see how a 2012/13 tax return she sends HMRC can be rejected as being out of time in the absence of a CN or DA etc.)
That may be a rubbish suggestion however and you would need to check all that.
HMRC need to tell you the legislative justification for this purported 4 year time limit, as in the absence of a discovery assessment, determination or closure notice etc., I am not aware of any such SA100 filing time limit following the issue by HMRC of a notice to file.
Yes; sorry, this problem issue has come up here before and I thought that that had that effect but was too busy to check. It looks like you might be snookered here.
Maybe if your client did a DDS disclosures for some (minor) undeclared income you could see if that produces a way to get HMRC to raise a discovery assessment or whatever and then appeal that (due to the POA or whatever) and if necessary get the tribunal to correct the overall tax due (a long shot though)?
payments on account eventually become the SA liability so as she is out of time she is screwed (unless special relief applies which according to you doesn't).
I had a similar situation but going back to 1996/7 - yes really. HMRC will not budge. Her small 2018 tax refund was used to reduce 1997 POA (client had emigrated) Have spent far too much time chasing it.
This seems to be another incidence of HMRC essentially stealing somebody's money because the rules for administering of tax allows them (or assists them) to do exactly that. We have found similar issues with PAYE overpayments, CIS refunds and VAT refunds. Once HMRC has the cash they seem to use every excuse under the sun to hold onto it even when everybody accepts (HMRC included) that it is not owed. We have been told more than once that 'the system' is at fault.
This looks so Catch-22. Unless you find another way through the legislation, it is probably best for you and her to talk to her Member of Parliament and seek their help.
Apply to the tribunal for HMRC to issue a Determination.
Submit a return- yes I know they may send it back, but this is "For the record".
Appeal against the Determination.
As far as I know HMRC were required to issue a Determination.
P.O.A are what they say. They are not Assessed tax.
See and employ a tax counsel. If it costs £1000 she has got away cheap.
There used to be something called "equitable liability", where if HMRC were (validly) pursuing a totally unreasonable debt you could ask for it to be cancelled. It was never widely publicised but you can still find articles about it online (I just did!).
Might a different approach be possible - tell HMRC to take the taxpayer to County Court to enforce the 'debt'? Judges normally have the common sense to deal with issues like this.
Just a thought.
Tim
Whatever happened to the principle of "paying the right amount of tax"? Or is that just for tax avoidance?