Policy and research officer The Chartered Institute of Payroll Professionals (CIPP)
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HMRC’s one to many letters to tackle P11D and P14 discrepancies

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HMRC has issued letters using their one to many (OTM) approach to combat discrepancies between P14s and/or the P11D, with workers' self assessment declarations for 2019/20.

13th Oct 2021
Policy and research officer The Chartered Institute of Payroll Professionals (CIPP)
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The latest round of letters sent to taxpayers and agents aims to encourage them to investigate potential discrepancies and to work with HMRC to resolve those issues.

HMRC’s one to many (OTM) letters

The OTM letters are not an official compliance check or a notice of investigation. Where a letter is received it is advised that the individual or agent checks the figures provided to HMRC for discrepancies and makes steps to correct them. The letter will detail the steps required to achieve this.

This project is a joint effort of the wealthy external forum, the agent compliance team (ACT) and campaigns and projects (C&P). C&P will be contacting individuals where a difference in reporting has been identified. ACT will be targeting agents dealing with large numbers of individuals, to discuss all their clients at once.

Agents, where this is the case, will want to complete investigations promptly and engage with HMRC to reach a beneficial outcome. With large numbers of a single agent’s clients showing discrepancies, it may indicate systemic issues that HMRC will be keen to investigate further. The draft letter from HMRC’s ACT stresses the importance of the professional conduct in relation to taxation (PCRT). 

An individual where the self assessment is believed to be correct after investigation would be advised to contact the payroll department(s) of the employer(s) they have worked for. This may identify discrepancies that can be resolved for future years.

If after all investigations are completed, and the conclusion is no amendments are required, contact with HMRC would be beneficial to ensure no investigations are escalated from their end. Where more time is required, contact can be made with HMRC to be granted an additional three months for investigation and appeal. The reasonable excuse for not meeting tax obligation criteria have also been expanded to allow for coronavirus related reasons.

When to expect the letters and why has it taken so long?

HMRC allows a reasonable amount of time before issuing OTM letters in case employers or taxpayers identify and submit any amendments through their own investigations.

The wealthy external forum briefing gives the below dates for these letters to be sent. Some letters will therefore have already been received; however, these dates may be subject to change.

“Agent Compliance Team will contact agents between July and September 2021, but expect the majority of agents dealing with Wealthy customers to be contacted late August. It is expected that C&P will issue letters during September to October 2021.”

This OTM correspondence is the latest in a string that HMRC has issued, including deemed domicile declarations and omitted capital gains on a second home.

This may cause frustration with individuals where they find that no errors have occurred, but with the onus of investigation still being placed on them and their agents. 

P14

The P14 is a year-end report of the pay and tax received by an individual, which is sent to HMRC by an employer. The form was replaced by the year-end Full Payment Submission (FPS) and Employer Payment Summary (EPS) with the introduction of Real Time Information (RTI).

P11D

P11D forms are used to declare any taxable benefits in kind funded by the employer, such as company cars and medical cover. This does not need to be completed where no taxable expenses or payment of benefits are to be returned for an individual, or if all expenses and benefits have been taxed through the payroll.

Self assessment

Individuals who meet the criteria must submit a self assessment tax return where they detail all their pay, benefits, and other income to HMRC for review. Any shortfall in tax paid must then be paid based on HMRC’s assessment.

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Replies (13)

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By Hugo Fair
13th Oct 2021 15:02

A useful and salutary article on HMRC's increasing use of 'nudge' letters to get the taxpayer (or agent) to do often quite unnecessary work. However, a few quibbles:

* "Individuals who meet the criteria must submit a self assessment tax return "?
I thought that tool was just HMRC 'advisory' (aka guidance) - the only "must submit" is when the individual has received (from HMRC) a Notice to do so?

* "The P14 .. was replaced by the year-end FPS and EPS with the introduction of RTI"
True - but it might've been useful to mention the P14's twin - the P60 (employee copy) - which is still very much alive and likely to be a useful part of taxpayer's files.

* "An individual where the self assessment is believed to be correct after investigation would be advised to contact the payroll department(s) of the employer(s) they have worked for"
Why? And for what purpose if there's no discernible anomaly to bring to their attention?

* "The latest round of letters sent to taxpayers and agents aims to encourage them to investigate potential discrepancies and to work with HMRC to resolve those issues"
So do the letters disclose which 'potential discrepancies' are in the spotlight? If not, then:
- the 'innocent' are being asked to do an unnecessary review of all their tax affairs ... at their cost and to no-one's benefit; whereas
- those 'hiding' something are unlikely to step forward if the omission was deliberate ... which leaves the small number who have been 'forgetful' to have their memory jogged.
I fail to see that the return from such a fishing trip is commensurate with the burden being imposed ... time for a TIIN on these policy decisions?!?

Thanks (5)
Replying to Hugo Fair:
By SteveHa
13th Oct 2021 16:09

Hugo Fair wrote:
I fail to see that the return from such a fishing trip is commensurate with the burden being imposed ... time for a TIIN on these policy decisions?!?

I agree with all of your observations, though on the last I fail to see the point at all. If there is a reasonable supposition of irregularities, TMA gives HMRC all the power that it needs to investigate those irregularities, without introducing extra statutory procedures that only serve to extend their deadline.

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Replying to SteveHa:
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By Paul Crowley
13th Oct 2021 16:59

Agreed HMRC have the sort of deemed power to inconvenience as many people as they want to. But they regularly get a good kicking at FTTs
But a TIIN to explain the rationale, costs to taxpayers, and expected outcomes is justified
How many nudge letters, or accusations as clients would perceive, result in a tax adjustment. If less than 1 in 10 then surely HMRC should be refunding 9 in 10 agents fees to taxpayers that HMRC knowingly and deliberately targeted and falsely accused.

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By Paul Crowley
13th Oct 2021 17:03
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By Paul Crowley
13th Oct 2021 17:10

Dear Matthew
This could be simplified to just confirm that HMRC love shotguns
And shoot blind hoping something gets hit

My clients have had maybe 5 in total over the last couple of years in the way of nudges
5 misses for HMRC

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By Kate Upcraft
14th Oct 2021 10:40

I sincerely hope 'P14" isn't mentioned in any communication from HMRC given it hasn't existed since 2013. If these letters ask people to talk to their employer as the assumption is the taxpayer is correct and the employer isn't, I'm surprised this has not been discussed with stakeholders at the Employment and Payroll Group, could you clarify how CIPP has taken this angle forward?

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Replying to bassett1:
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By raycad
14th Oct 2021 12:07

Kate - I can assure you that the OTM letter does indeed refer explicitly to forms P11D and P14 - I got one of these late last year. But it's worse than that - much worse. The letter sent to agents does not say which client(s) it relates to!

The heading to the letter is (with my abbreviations for brevity) "About the BIK and/or pay and tax details on your client's 2019-20 SATR". Note the use of the word client's with an apostrophe which would suggest a single client. But we're not going to tell you which one - that's for you to suss!! That is not a "nudge" at all - it is vague insinuation.

This letter followed shortly on from one of my clients having had an SA Enquiry, which alleged that his car BIK had been under-reported. Turned out that some muffin in HMRC had manually over-ridden the P11D figures for the third of three cars used in the year; the latter had only been used for the final three weeks of the tax year but said muffin had substituted the correctly-reported time-apportioned BIK with the ANNUAL figure for that car!

I made a formal complaint and ultimately my fees were reimbursed to the client. I also complained to the Team Leader re the OTM letter . She assured me that there was no connection between my getting this and the SA Enquiry. Hmmmm. But she did not respond to my point that no client name was specified in the OTM letter! Or even that it was indeed this particular client that was being alluded to.

I'm ex-Revenue myself but this sort of thing makes my blood boil. It's lazy and takes no account of the impact on the agent who gets one of these letters, nor of the client relationship issues. Yes, definitely a case of ONE TOO MANY!

Thanks (3)
Replying to raycad:
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By Paul Crowley
14th Oct 2021 12:23

As I read what you have posted
HMRC sent a letter to you the agent, but did not specify any client?

What were they trying to do?

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Replying to Paul Crowley:
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By raycad
14th Oct 2021 12:52

I wish I knew, Paul, I really do. Credit to the Team Leader for engaging with me on this by email but I was none the wiser afterwards and she wouldn't even tell me if the apostrophe was indeed aberrant or not!

Thanks (1)
Replying to raycad:
By Kate Upcraft
14th Oct 2021 12:45

thanks how enlightening, civil servants designing campaigns don't even have any concept of correct grammar/get their templates proof read? Such a great example too that it may not be the taxpayer or the employer that has corrupted the data but HMRC - who would have thought it!!

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By Paul Crowley
14th Oct 2021 12:26

"This project is a joint effort of the wealthy external forum, the agent compliance team (ACT) and campaigns and projects (C&P). C&P will be contacting individuals where a difference in reporting has been identified. ACT will be targeting agents dealing with large numbers of individuals, to discuss all their clients at once."
What?
How can any agent deal with all clients at the same time?

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By tedbuck
14th Oct 2021 13:33

The more I hear the more I am forced to conclude that HMRC no longer have the ability to look into 'Dodgy' taxpayers. For years now the only cases I have heard of are those where the business is big enough to be a potential good kill. Usually it isn't - it is just that HMRC have misinterpreted the figures and because they cannot ask a question informally any longer they bound into an enquiry.

The little people or those who can deal in cash are now pretty bombproof as HMRC wouldn't see them if they were waving a flag and couldn't be bothered to do anything anyway. Example - reports to the NCA achieve absolutely nothing 99% of the time unless they are nice juicy cases. The only thing is that there are lots of 'little' people doing work for cash, not declaring it, claiming benefits, having their rent paid and laughing their heads off at HMRC and, of course at us, as we are effectively paying their taxes for them.

Does HMRC look at the postcode addresses of the guys earning £15k a year and living in £500,000 houses? Presumably not although it wouldn't be too costly to do.

Still I suppose a generic letter to accountants transfers the burden to them and lets HMRC's people WFH (GDPR questions there I imagine) with their feet up so that they don't have to get their hands dirty and mix with their 'Customers'.

Used to think that HMRC were pretty good but regretfully cannot feel the same way now as all they can do is introduce new ways to fine 'Customers' for not acting timeously. And isn't that the biggest insult of all as HMRC haven't acted timeously for years as their delay in replying stretches from weeks to months and soon, no doubt, to years.

Still they are good at Acronyms!

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By Mr J Andrews
18th Oct 2021 16:01

One To Many . Or should it be One TOO Many ?
Like every other OTM plead for help from HMRC owing to inadequate staffing levels { and inadequate staff }, the bliss of ignorance should be the response.
Matthew's opener mentions that these ''fishing expeditions'' aim to encourage ''WORKING WITH HMRC'' to resolve potential issues. The concept of ''Working Together'' with the Revenue went out of the window following Honcho Harra's plugging on like a mindless lemin with MTD .

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