I received a P800 regarding my late father's 2013-14 affairs the other day. It demanded a repayment of £220. The estate was distributed more than a year ago - I was executor. I had checked the income tax calculations at the time and they were correct.
The only narrative given was a one line "statement of fact": "The amount of gift aid deduction included in your PAYE code was higher than the amount due."
What?!? That may have some bearing on the tax collected under PAYE but not on the tax calculation for 2013-14 confirmed by a previously issued P800 and subsequently settled by cheque.
I compared the two P800s and found that the PAYE income and tax figures had been inexplicably reduced from those provided by my father's pension provider in writing and included on the original tax return. After 35 minutes on hold, I asked HMRC where they had got the new income and tax figures from. I got no answer other than to ask me to send in copy payslips and correspondence with the pension provider and they'd have a look at it.
I decided I'd double check with the pension provider as I don't recall ever receiving a P60 from them for 2013-14. During that conversation they mentioned that in July 2015 they sent HMRC a P14A regarding a repayment of pension from date of death to the date of the last payslip. The repayment had been fully accounted for in the return made to HMRC. HMRC are double counting this adjustment!
Does no-one in HMRC do any proper checking? Was their mention of an incorrect PAYE code because of something to do with gift aid duplicitous - why else would they have put it on their letter? The reason should have been that they believed the amount of tax paid had been overstated in the estate tax return. (But I suppose that might expose them to the fact that they never added the information provided by the pension provider together which would have confirmed the figures on the original return as correct.)
Rant over, but please, please, please, if you receive a P800 at any time, check it over carefully!
Here's what Ed Molyneux, founder and CEO of FreeAgent, had to say:
"... The HRMC assumes that when people incorporate it is always a cynical move, it is always for tax reasons. And that’s not really how it works, for some people that may be the case, but many times when you’re working for a large company they expect you to have a limited company. And that’s what they tend to ignore..."
I know several sole traders who have had to incorporate recently because the European Commission will no longer fund unincorporated entities to participate in projects funded by Europe. They never would have incorporated otherwise.
My answers
Staggering inaccuracy / duplicity
I received a P800 regarding my late father's 2013-14 affairs the other day. It demanded a repayment of £220. The estate was distributed more than a year ago - I was executor. I had checked the income tax calculations at the time and they were correct.
The only narrative given was a one line "statement of fact": "The amount of gift aid deduction included in your PAYE code was higher than the amount due."
What?!? That may have some bearing on the tax collected under PAYE but not on the tax calculation for 2013-14 confirmed by a previously issued P800 and subsequently settled by cheque.
I compared the two P800s and found that the PAYE income and tax figures had been inexplicably reduced from those provided by my father's pension provider in writing and included on the original tax return. After 35 minutes on hold, I asked HMRC where they had got the new income and tax figures from. I got no answer other than to ask me to send in copy payslips and correspondence with the pension provider and they'd have a look at it.
I decided I'd double check with the pension provider as I don't recall ever receiving a P60 from them for 2013-14. During that conversation they mentioned that in July 2015 they sent HMRC a P14A regarding a repayment of pension from date of death to the date of the last payslip. The repayment had been fully accounted for in the return made to HMRC. HMRC are double counting this adjustment!
Does no-one in HMRC do any proper checking? Was their mention of an incorrect PAYE code because of something to do with gift aid duplicitous - why else would they have put it on their letter? The reason should have been that they believed the amount of tax paid had been overstated in the estate tax return. (But I suppose that might expose them to the fact that they never added the information provided by the pension provider together which would have confirmed the figures on the original return as correct.)
Rant over, but please, please, please, if you receive a P800 at any time, check it over carefully!
It's sometimes a reluctant move to incorporate
I know several sole traders who have had to incorporate recently because the European Commission will no longer fund unincorporated entities to participate in projects funded by Europe. They never would have incorporated otherwise.