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Two tax nudges for company controllers from HMRC | accountingweb

Two tax nudges for company controllers from HMRC


HMRC has sent more than 2,300 letters to individuals identified as people with significant control (PSC) asking them to check whether their last self assessment tax return was correct.

18th Nov 2022
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The people with significant control (PSC) regime was introduced for companies registered in the UK from 6 April 2016. It requires those companies to look through all the layers of ownership of the organisation, identify the relevant persons who ultimately have significant control of the company, and register details of those PSCs with Companies House.

A PSC is broadly a person who:

  • directly or indirectly owns more than 25% of the shares in a company
  • directly or indirectly holds more than 25% of the voting power of a company
  • has the right to appoint or remove the majority of the directors of a company, or
  • can exercise significant influence over the company.

Much of the information about the PSC is available on a public register at Companies House. 

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Replies (19)

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By Paul Crowley
18th Nov 2022 10:35

This is just ignorant harassment
They think that ANY 25% PSC must have income exceeding £100,000.
Pointless, lazy and unworthy of a G7 nation

Every chip shop company makes a profit of at least £250,000 if husband and wife are involved?
We deal with 100 companies, probably 200 PSCs
£100 of wasted time arising from this nudge per person so about £20,000 of time I need to spend.
Is it best that I send the bill directly to Jim?

Odd that.
Seems to me that my clients are 10% of the total population.
Or is it the case that they already have proper information and are writing to the crooks, but knowing how bad their 'information' often is they dare not open a proper enquiry

Thanks (12)
By Stewie Griffin
18th Nov 2022 11:09

Would love to know how they calculate "expected levels of earnings"

Thanks (5)
By ireallyshouldknowthisbut
18th Nov 2022 12:12

I would suggest virtually all our company director clients have incomes under £100k as they don't want their PA to be lost.

Any surplus tends to go into pension or left in the company.

Thanks (12)
Replying to ireallyshouldknowthisbut:
By Paul Crowley
18th Nov 2022 12:26

It could only apply to the kind of client that I do not act for

Thanks (5)
By Red1960
18th Nov 2022 13:03

Paul is right this is harassment and intimidation plain and simple.

If HMRC had reviewed the accounts and the affairs of the companies involved they would know what the reporting obligations of the directors are.

If that were the case these underhand and disreputable practices would never have been necessary in the first instance because they would simply open an enquiry and settle the matter honestly.

This entire practice only becomes necessary if HMRC doesn't do its job and that is the problem because HMRC is, to put it bluntly, not fit for purpose and no amount of digital castles in sky will ever be sufficient to conceal that simple truth.

Thanks (12)
By Hugo Fair
18th Nov 2022 21:32

'HMRC commented: “We regularly send letters to customers to educate, remind or prompt them to review their tax affairs, particularly where we have information that suggests there are specific risks to the payment of tax owed.”
The usual aspect of this campaign is the apparent judgment programmed into the HMRC computer that the individual’s income is below the expected level."'

1. I presume the final sentence is *meant* to say "The UNusual aspect .." - although it's a moot point given that HMRC don't really understand how to program the parameters for the triggers that 'select' taxpayers to be the lucky recipients of their nudge letters.

2. Their standard explanation may have been written by those clever legal/marketing hybrids they maintain for such purposes ... but "to educate, remind or prompt them to review their tax affairs" is complete tosh.
It is unmitigated bullying of the worst kind that wastes the time of countless taxpayers and agents - in return for what?
A miniscule number of 'confessions' of additional tax due ... most having nothing to report, but certainly unlikely to change either the deliberate under-declarers or any omissions due to ignorance.

In terms of morality it is an abuse of power - not far removed from the drunk looking for a fight but wanting (in their mind) to remain 'in the right':
"'Oo yer lookin' at?" ... and when you reply "No-one";
"You callin' me a liar then?"

Thanks (11)
Replying to Hugo Fair:
By Paul Crowley
19th Nov 2022 23:04

"You callin' me a liar then?"
Only ever spoken by liars

Thanks (3)
By D V Fields
19th Nov 2022 10:34

Such letters always seem contrary to the spirit of the “HMRC Charter” but HMRC appear to be ignorant of its existence.

Thanks (10)
By Software Seeker
21st Nov 2022 10:05

A few of my clients have received letters under the various HMRC nudge campaigns. They've all hidden nothing but the tone of these letters understandably worries them. A bit like getting stopped by a traffic cop when you've done absolutely nothing wrong; you somehow feel guilty of something but have done nothing to feel guilty about. I am not into bashing HMRC for the sake of it, however I think they could do with a bit of a re-think about how these letters come across.

Thanks (2)
By moverend
21st Nov 2022 10:18

Before sending out random letters harassing taxpayers why don’t HMRC have a go at answering the post and calls they receive.

It takes months if not years (literally in some cases) to get so much as a reply to errors that HMRC makes when trying to correspond with them.

If they are intent on ensuring the tax system is “fair” and everyone pays the “right” amount of tax then hopefully they’ll start advising taxpayers about reliefs and exemptions they are entitled to as part of this programme……!

Thanks (6)
21st Nov 2022 10:41

According to HMRC, we are all now "customers". So, would Tesco send out general letters asking why you've not been instore for a while, or would John Lewis chase up why you've not bought a new telly recently? Of course not. It's just PR spin instead of concentrating on providing the proper function it is supposed to serve.

Thanks (4)
By johnjenkins
21st Nov 2022 15:44

Yes they do actually.

Thanks (1)
By Jackie UK
21st Nov 2022 12:14

Maybe the problem could be that its so hard to get a UTR.
I don't take on new clients anymore but when my son went freelance last year and we set up a company for him I naturally agreed to sort accounts and tax. I recently sat with him to request a UTR online, we answered all the questions. He got a message a few days later saying the information provided is incomplete and he would have to apply again. It doesn't say why it's incomplete. He is traveling all over the world and I of course can't get authorisation as agent with no UTR so hard to help him sort it out. I have a 2022 tax return sat waiting to be filed and declare what he owes. Why does it have to be so hard :(

Thanks (2)
By kevinringer
21st Nov 2022 12:42

HMRC used to make a big thing about their ability to process loads of data from multiple sources. HMRC already know the earnings of the PSC have from the PAYE records. HMRC already know what loans the PSC have from the P11D data. HMRC already know how many shares the PSC have from the Companies House data. HMRC can calculate the dividends from the Companies House data. HMRC therefore can identify all the income and see if it meets the SA criteria and then target those who meet the criteria but failed to register, or have registered but declared something different. But no, HMRC are lazy and despite all their boasts, HMRC can no longer join the dots. They find it easier to hit everyone, which of course tells the offenders that HMRC hasn't a clue who the offenders are which gives the offenders the confidence to continue offending. In other words, these scattergun approaches achieve the opposite of what HMRC intends.

Thanks (3)
Replying to kevinringer:
By Paul Crowley
21st Nov 2022 12:53

Good description
It worries the honest taxpayer and confirms their ineptitude to the others

Thanks (2)
By Mr J Andrews
21st Nov 2022 12:44

The impudent insolence of this inept Govt department beggars belief. ''Nudge Two'' in particular infers HMRC are self appointed experts on remuneration levels and that their hedgebetting letters are for educational purposes. Their time would be better spent investigating abuse of the National Minimum Wage.

Thanks (1)
Replying to Mr J Andrews:
By Nick Graves
21st Nov 2022 14:24

I think I'd be inclined in the cases of my PSCs where there dividends are reduced because of the crap economy & BBL repayments, etc, to ask HMRC where do my clients apply for tax credits in order to restore their income levels?

I can be an infuriating timewaster, too...

Not least by using run-on sentences.

Thanks (0)
By tedbuck
21st Nov 2022 15:23

As has been said HMRC are incompetent and not fit for purpose. I thought they were Civil Servants but can't see much serving - they don't answer post, they don't answer the telephone and dealing with electronic submissions indicates that their computers are of a like mind - in fact it is hard to see what their purpose is.
Interesting that they used to be good before digitalisation - perhaps computers aren't as s**t hot as they seem to think.
I still think that every time they box things up we ought to send them a bill. It might, only might, show them how rubbish their service is. Perhaps the new chancellor will use his head boy experience to ginger them up a bit and get them into the office to work. I certainly don't want them sitting on their behinds at home reading the Daily Worker rather than actually working whilst I am paying their salaries.

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By steve 12321
21st Nov 2022 19:58

If they want big paybacks, get them all on Covid loan/support fraud and recovery. It is a bit late to stop it, but there will be assets to go after. I daresay the scammers' tax affairs might be worth a look at too!

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