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Teaching grandma to suck eggs

You send an expense claim by letter because no Notice to File has been issued and then...

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A PAYE client who hasn't been asked to file a return wants to claim expenses for 2020/21, so I sent an appropriate letter to HMRC at the end of June. In record time, I received a reply dated 25 October. It tells me that the taxpayer must have paid tax in the year they spent money on the expenses. It says how much they can claim depends on the rate they pay tax. For example-if they spent £60 and pay at a rate of 20%, they can claim £12.  Good to know that HMRC can explain these tricky points to us agents.  But the final sentence says "as your client has to complete a tax return for 20/21, they must make the claim for expenses using that form.

And when I checked, the notice to file was issued today, the 28th

I should be pleased to receive a reply within 4 months given the other claims I am still waiting on. 

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Replies (16)

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By rmillaree
28th Oct 2021 15:00

Hmmmm-can you confirm expense claim is for less than £2,500 per tax year

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Replying to rmillaree:
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By Jo Nokes
28th Oct 2021 15:31

Oh dear, it was more than that. My bad, I suppose, I should have simply asked them to issue a Notice to file. Oh well

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Replying to Jo Nokes:
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By rmillaree
28th Oct 2021 15:49

"Oh dear, it was more than that. My bad, I suppose, I should have simply asked them to issue a Notice to file. Oh well"
You will be far from being alone in having beeen caught out by that sneaky rule.

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Replying to Jo Nokes:
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By I'msorryIhaven'taclue
28th Oct 2021 16:17

Looks like you have some egg on your face, Jo ;-)

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Replying to I'msorryIhaven'taclue:
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By Jo Nokes
28th Oct 2021 16:22

Not for the first time, :)

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By bernard michael
29th Oct 2021 09:45

I'd be interested to hear what your client says when he's told he now has to file a return and be charged for it. Will the expenses tax benefit cover your fee??

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Replying to bernard michael:
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By Jo Nokes
29th Oct 2021 11:23

As it happens, it will, Bernard

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Replying to bernard michael:
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By Mr_awol
29th Oct 2021 11:46

As the notice to file has been triggered by expenses of £2.5k you'd hope there would be more than £500 in it. In fact youd hope an e'ee with *genuine* expenses over £2.5k was probably a HR taxpayer so perhaps a grand.

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Replying to Mr_awol:
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By Jo Nokes
29th Oct 2021 11:59

You are correct Mr Awol, and in fact the claim, if successful, reduced the income at a critical point. The personal allowance that had been reduced, is now increased, so the rate of tax involved is 60%

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Replying to Jo Nokes:
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By gillybean04
01st Nov 2021 08:58

If their income was over 100k (to affect their personal allowance) then a return was required in any event and (if not already in SA for 20/21) then they had an obligation to notify hmrc by 5th October that they were required to file.

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Replying to gillybean04:
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By Paul Crowley
01st Nov 2021 09:07

It is one of the reasons on SA100
But in fairness to client HMRC already knew from P60 and took no action?

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Replying to Paul Crowley:
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By gillybean04
01st Nov 2021 11:46

Could you imagine if HMRC were issuing failure to notify before giving the taxpayer the opportunity to notify?

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Replying to gillybean04:
By SteveHa
01st Nov 2021 09:15

gillybean04 wrote:

If their income was over 100k (to affect their personal allowance) then a return was required in any event and (if not already in SA for 20/21) then they had an obligation to notify hmrc by 5th October that they were required to file.

Ermm, care to quote the legislation to support that view? Or are you just perpetuating HMRC's misguided view?

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Replying to SteveHa:
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By gillybean04
01st Nov 2021 11:44

My mistake & apologies. For some reason I thought dividend income was also received but that appears to have been another thread. I'll try to remember and reread the original post before responding, if coming back to a thread later.

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Replying to SteveHa:
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By Jo Nokes
01st Nov 2021 11:53

I haven't checked the legislation, but HMRC's own manual says
`But the obligation to notify does not apply where all of the person’s income is subject to PAYE or where sufficient tax has been deducted at source to meet the net liability for the year.'

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Replying to Jo Nokes:
By SteveHa
01st Nov 2021 12:23

The legislation is simple - TMA 1970 S7. Anyone doing personal tax work should familiarise themselves with it. HMRC clearly don't, and need to be corrected frequently.

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