I have just had the pleasure of Kevin at HMRC. HMRC have sent our FPS/EPS's off for review with there specialist team, why? because on a number of months they dont match what we sent in. I spoke to a lovely lady who was very helpful and confirmed that they were still looking in to it (original issue raised by me in November BTW) and could not give me a time frame for it being sorted, but to keep doing as i had.
I then raised the issue of payments being allocated to the previous year, to which she responded i need to go through to the payments allocation team. Here is where we meet the bonnie Kevin!
Kevin informs me that in order to get the payments reallocated i need to tell him which payments have been mis-allocated.
I explain that i cannot do that as the payments have not been allocated cleanly (i.e. part to one part to another) and that since the over payment was made, the 12/13 year has not been accessable on the dashboard. To be able to tell him how they have been allocated i would need to see it.
Kevin then informed me that he cannot reallocate the payments without me being able to tell him why they have been allocated to the previous year. I explain that i cant tell him that because i dont know why HMRC have allocated them there, as i have no control over how HMRC operate (mores the pity).
I tried to explain that it was physically impossible for me to reconcile what had happened, if they werent prepared to show me how they had allocated the payments. He said he couldnt allocate the payments unless i could tell him how they had been allocated.
To which we went round in circles a few times!!
Apparently I am now going to have to write to explain to the revenue why there is a £14k over payment in 12/13 (whilst there is a £14k under payment 13/14 year) with out being sarcastic and flippant! Im not sure its going to happen!
I would guess the reason HMRC dont want to do it in house would be the upfront capital costs of setting up the infrastructure required. It seems that we are forever stuck in a world where short term savings outweigh the long term costs.
I believe the reason they now require explanation for the over payment was that a while back some forward thinking criminal types decided to use HMRC (may have been IR) for a bit of money laundering. Set up a ltd company, make massive over payments of things like PAYE/CT etc and then get the over payment (plus interest in the CT example) repaid electronically from HMRC. i.e. dirty money in, government clean money out.
Clearly though, the concept of common sense is once more the rarest of commodities at HMRC.
This appears to be yet another case of HMRC applying the law, but not showing any common sense or decency.
(I am going to quickly make clear that i am not aware of all the facts and have only read the above article, however....)
HMRC seem to have taken the view that they will only send reminders once a penalty has been incurred, even though, in this case, it appears that the individual had tried to sort it out before the 31 Jan deadline via his tax code.
This seems to be yet another tactic in the stealth approach used by HMRC to bump up its revenue via fines.
I used to be one of these accountants that sell tax avoidance (though never an EBT!), and the last time i checked, i thought it was our job to ensure that our clients paid the least amount of tax that was legally allowed. Any person who pays into a pension scheme is avoiding tax, but, we are lead to believe that is some how ok because it is mainstream and socially acceptable (btw i am not suggesting that using a scheme purely to avoid tax is the same as using a pension fund).
I agree with shosana, the only way to really stop the tax avoidance is to make the tax system simpler and more effective. Though 20% is, IMO too low. If it were up to me I would increase the pa and the bring back the old CT band to £15k and then scrap NI and make any income over that £15k liable to a 33% tax. That would give those on low incomes enough and then anything else (be it salary, profit, whatever) would face the same tax. Then there would be no benefit in trying to structure things differently, and the tax take would increase. Don't get me wrong, i do not believe this will ever happen (and i also don't think this would be a perfect system either).
My answers
We need to talk about Kevin....
I have just had the pleasure of Kevin at HMRC. HMRC have sent our FPS/EPS's off for review with there specialist team, why? because on a number of months they dont match what we sent in. I spoke to a lovely lady who was very helpful and confirmed that they were still looking in to it (original issue raised by me in November BTW) and could not give me a time frame for it being sorted, but to keep doing as i had.
I then raised the issue of payments being allocated to the previous year, to which she responded i need to go through to the payments allocation team. Here is where we meet the bonnie Kevin!
Kevin informs me that in order to get the payments reallocated i need to tell him which payments have been mis-allocated.
I explain that i cannot do that as the payments have not been allocated cleanly (i.e. part to one part to another) and that since the over payment was made, the 12/13 year has not been accessable on the dashboard. To be able to tell him how they have been allocated i would need to see it.
Kevin then informed me that he cannot reallocate the payments without me being able to tell him why they have been allocated to the previous year. I explain that i cant tell him that because i dont know why HMRC have allocated them there, as i have no control over how HMRC operate (mores the pity).
I tried to explain that it was physically impossible for me to reconcile what had happened, if they werent prepared to show me how they had allocated the payments. He said he couldnt allocate the payments unless i could tell him how they had been allocated.
To which we went round in circles a few times!!
Apparently I am now going to have to write to explain to the revenue why there is a £14k over payment in 12/13 (whilst there is a £14k under payment 13/14 year) with out being sarcastic and flippant! Im not sure its going to happen!
Capital upfront
I would guess the reason HMRC dont want to do it in house would be the upfront capital costs of setting up the infrastructure required. It seems that we are forever stuck in a world where short term savings outweigh the long term costs.
PFI hospital anyone!?!?!?!
Im not saying its right....
I believe the reason they now require explanation for the over payment was that a while back some forward thinking criminal types decided to use HMRC (may have been IR) for a bit of money laundering. Set up a ltd company, make massive over payments of things like PAYE/CT etc and then get the over payment (plus interest in the CT example) repaid electronically from HMRC. i.e. dirty money in, government clean money out.
Clearly though, the concept of common sense is once more the rarest of commodities at HMRC.
The tax man cometh (like a ninja)
This appears to be yet another case of HMRC applying the law, but not showing any common sense or decency.
(I am going to quickly make clear that i am not aware of all the facts and have only read the above article, however....)
HMRC seem to have taken the view that they will only send reminders once a penalty has been incurred, even though, in this case, it appears that the individual had tried to sort it out before the 31 Jan deadline via his tax code.
This seems to be yet another tactic in the stealth approach used by HMRC to bump up its revenue via fines.
20% is not enough
I used to be one of these accountants that sell tax avoidance (though never an EBT!), and the last time i checked, i thought it was our job to ensure that our clients paid the least amount of tax that was legally allowed. Any person who pays into a pension scheme is avoiding tax, but, we are lead to believe that is some how ok because it is mainstream and socially acceptable (btw i am not suggesting that using a scheme purely to avoid tax is the same as using a pension fund).
I agree with shosana, the only way to really stop the tax avoidance is to make the tax system simpler and more effective. Though 20% is, IMO too low. If it were up to me I would increase the pa and the bring back the old CT band to £15k and then scrap NI and make any income over that £15k liable to a 33% tax. That would give those on low incomes enough and then anything else (be it salary, profit, whatever) would face the same tax. Then there would be no benefit in trying to structure things differently, and the tax take would increase. Don't get me wrong, i do not believe this will ever happen (and i also don't think this would be a perfect system either).