Over a cup of tea this week, Teresa told me a story from the tax department.
"You know our client Mr Redfern, Allie? The one who won't let us act as his agent? We tried sending him a 64-8 to sign but he sent it back with a letter saying he preferred to deal with HMRC himself."
"Oh, no," I sighed. "What happened?"
"I got another letter from him enclosing one from HMRC. His tax codes have been wrong for years. And you know he has a lot of income from his pensions, from abroad, and his property here, and he's been trying to pay tax on all of that through his tax codes. But he hasn't paid enough. I did warn him that it didn't look like his tax codes were right, but he wouldn't have it. And now they're asking him to pay tens of thousands in extra tax, not to mention interest and penalties."
"Interest and penalties? Can they do that? Isn't it their mistake?"
"You'd think so, Allie. But of course under Self Assessment it's up to him to make sure he's paying the right amount of tax."
"But he's a lay person, how would he know whether he's paying the right amount of tax? Surely that's HMRC's job?"
"I think he's got no choice about paying the tax itself, but the interest and penalties, I agree, that's questionable."
"But what does he expect us to do about it when he won't let us act as his agent?" I asked. "We can't write to HMRC and challenge the interest and penalties on his behalf. We're not his agent. They'd just ignore the letter, or throw it in the bin."
"I'm going to write a letter for him to sign and send to them," explained Teresa. "He will have to pay the tax, Allie, there's no question of that, but you're right. I think we should put to them that as a lay person with lots of different sources of income, he can't be expected to understand how the tax code system works. It's worth a try."
To be honest, I don't think Teresa is holding her breath. And I'm not a tax specialist, by any means, but my prediction is that Mr Redfern is going to have to dig very deep into his pockets to pay a very large sum of interest and penalties, since the tax he has underpaid runs into the tens of thousands.
But there is no harm in her asking HMRC... or will Mr Redfern just be even more upset if he has to pay for Teresa's time as well as the interest and penalties?