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Practice Tips - Stop getting fined for revenue errors

15th Jul 2005
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The Inland Revenue has issued 952,766 penalty notices this year for tax returns not sent in by 31 January.

Working Together issue 17, it also admitted to sending out a significant number of apologies to people fined in error. The Revenue said any such fines were the result of “individual processing errors”.

In the years since self assessment began, I have yet to see a client fined for not sending in a return when they had actually done so. But there have been fines every year for people who were issued with two tax returns under separate references. What percentage of the total fines issued were the result of this widespread error on the part of the Revenue?

The problem of these duplicate numbers for the practitioner is the sheer effort it takes to solve the problem. To try and minimise the problem, try the following procedure.

1. When the client receives a duplicate return, send it back in the first instance and advise the Revenue of the reference under which the return will be submitted and ask for the duplicate to be cancelled.

2. When submitting the real return, advise that it also covers the duplicate return issued under the separate reference.

3. When (inevitably) you are advised of the penalty on the duplicate return, send copies of both letters to the client and the Revenue and ask for the Revenue’s apology and payment of costs of at least £100 plus VAT. The claim is justified because it never costs less than that to deal with all this mess.

To the Revenue’s credit they’ve always apologised and paid up when I’ve asked them to do so. But it’s frustrating, and still loss-making to have to go through all this. But it's better that than having the client think you’re not on top of their case and might have forgotten to send their return in for them. That would be an invitation to look for another accountant.

The Working Together note adds that the Revenue will consider claims for compensation under Code of Practice 1, for any reasonable costs which have been incurred as a result of its mistake or unreasonable delay.

If you’ve had a client fined for this reason, ask for compensation now. There’s no obligation to submit two tax returns a year.

Richard Murphy
AccountingWEB contributing editor Richard Murphy is a sole practitioner chartered accountant but was previously senior partner of a firm for 11 years. He has also been chairman, chief executive or finance director of 10 SMEs. A collection of previous articles by Richard on practice management themes is available in Practice Management Zone



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