Head of Insight AccountingWEB
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HMRC sends 12,000 wrong penalty letters

27th Apr 2012
Head of Insight AccountingWEB
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The tax department has been caught out by yet another bungle in its penalty letter dispatching system.

HMRC moved swiftly this morning to apologise for sending 12,000 penalty notices to people who have been taken out of the Self Assessment (SA) process.

An HMRC spokesman said: “We have identified that nearly 12,000 people have been sent a Self Assessment daily penalty letter in error. We are very sorry and can reassure these customers that we know who they are and that this letter is incorrect - they do not owe a penalty. We are writing to all of them to apologise and to explain this error.

“The 12,000 customers are among the 130,000 who we have already taken out of Self Assessment, following a cleanse of the database and our invitation to customers to contact us if they felt they shouldn’t be in Self Assessment. We can reassure these customers that they have been removed from Self Assessment.”

The alarm was first raised yesterday by AccountingWEB member bosclibby, who reported receiving penalty notices for clients who had successfully appealed against late filing penalties because 2011 Returns should never have been issued in the first place. Both clients received £580 late filing penalties based on £10 per day for the 58 days since the October 31 deadline for paper returns.

AccountingWEB member Jimess, whose client also received one of the letters, was told by the HMRC helpline that while his original penalty appeal had cleared the penalty, but the operative had “not checked the box or whatever they needed to do to clear the daily penalties”. In a follow-up statement on Friday afternoon, an HMRC spokesman said the mistake came about “when internal IT dates do not align correctly” in a new process to cancel SA returns already issued for a previous year.

“The cases have all been removed and are being corrected individually. We are urgently examining what happened and are acting on lessons learned from this error,” the spokesman added.

The latest incident is the third to occur in this area in the past year. In March, HMRC sent 17,000 letters wrongly claiming payments were late because payments received between 14-16 December 2011 were not recorded against outstanding charges until after the reminders had been selected for issue.

The previous incident was a simpler logistical error, when a lack of paper reportedly caused a number of statements of account to be sent out after the 31 July deadline last year. Yet it still echoes with news last week that the department had underestimated the workload that would result from its data cleansing exercise and had to switch more than 350 staff on to the task.

While HMRC has responded more quickly to this incident and is sending out letters to put taxpayers’ minds at rest, the sequence of events raises questions about whether the department learned anything from the previous incidents and has been able to put in place better review processes before dispatching penalty notices.

On this point, the deparment responded: “There is a detailed sampling process in place to ensure we only issue penalties correctly but this error was not picked up in the scans. We will be looking at the process again to make sure this error will not recur. There are over 9m taxpayers in Self Assessment . Unfortunately with a project of this scale things will very occasionally go wrong. We make every effort to minimise mistakes but when they occur we sort things out as quickly as possible.

“Over the last year we have worked very closely with agent stakeholders to devise a campaign which has been very successful in taking people out of SA. We have had a record number of taxpayers file on time, reversing a seven-year trend. We have lots more work to do but we are moving forward and whilst we deeply regret the issue of these incorrect letters, it should not be forgotten that this year at our invitation over 130,000 people have already been taken out of SA and people are still calling. We have nearly halved the numbers of people who received £100 penalties in comparison to last year and turned around years of late filing patterns.”

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Replies (27)

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By taxhound
27th Apr 2012 12:36

PLEASE

Stop calling them customers.

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Chris M
By mr. mischief
27th Apr 2012 15:30

Victims is the more appropriate term.  Or possibly:

Suckers

Marks

Mug Punters

 

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Replying to gareth40:
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By frustratedwithhmrc
27th Apr 2012 15:34

No they are none of these things...

They are taxpayers, not customers or any of Mr. Mischief's fruitier vernacular.

T.A.X. P.A.Y.E.R.S

 

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Replying to gareth40:
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By ThornyIssues
30th Apr 2012 12:52

Victims

mr. mischief wrote:

Victims is the more appropriate term.  Or possibly:

Suckers

Marks

Mug Punters

 

 

Indeed. Just to confirm that such a moniker is indeed valid. With the leak if the IR35 tests on Friday last, these so called "in business tests" should be more appropriately called VICTIM TESTS.

 

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Locutus of Borg
By Locutus
28th Apr 2012 00:58

Customers get to CHOOSE where to take their custom. I wonder how many 'customers' HMRC would be left with if their 'customers' got a choice about which tax authority dealt with their tax affairs!

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Replying to Ruddles:
Wild Billy Hickok
By Wild Billy
28th Apr 2012 12:59

You do realise WHY they use "customers"?

Ask yourself whether EVERYONE who HMRC has to deal with nowadays is ACTUALLY a taxpayer? Let's say some recipients of child benefit for example...

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Replying to Ruddles:
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By geoffwolf
30th Apr 2012 12:54

I suggested many years ago

Customers get to CHOOSE where to take their custom. I wonder how many 'customers' HMRC would be left with if their 'customers' got a choice about which tax authority dealt with their tax affairs! 

 

My suggestion many years ago was for a method to be found for taxpayers to opt the particular tax office he/she wished to deal with.

The poorly managed culprits would then easily be found out and those working and managing in the good offices would be promoted accand remunerated accordingly.

 

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By johnjenkins
29th Apr 2012 22:23

Look at it from the other end

We are "customers" of phone, gas, electric etc.etc. So ask yourself how are you treated by them. Yep the same way HMRC treats you so really "customer" is appropriate. We should inform Collins etc. of the new meaning of "customer".

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By nogammonsinanundoubledgame
30th Apr 2012 06:57

No need to use a common term for all

If you are in business, you call your customers "customers", and you call your suppliers "suppliers".  You do not call your suppliers "customers" because of some deep rooted compulsion to have a common label to describe all your relationships.

HMRC should call entities "taxpayers" in correspondence, articles and references to indivduals in relation to their tax affairs, and should call them "claimants" in such documents referring to individuals in relation to social security benefits that they administer.  Simples.

With kind regards

Clint Westwood

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By taxhound
30th Apr 2012 08:50

I'm with Clint on this one

I am a taxpayer.  Some of my clients are claimants.  None of us are customers as none of us are purchasing anything from them.  I am a customer of my gas supplier because I do buy gas from them, whether I have much choice in the matter or not.

 

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By MKH
30th Apr 2012 09:58

taxpayers

yes we are taxpayers and at 50p a stamp thats another £6000 wasted!

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Replying to DMGbus:
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By Extravision
30th Apr 2012 11:47

postage costs

its actually £9960 wasted- franked mail was 39p so £4680 for the blunder and an additional £5280 for the apology letters, as the postal prices increase today!, Maybe if they had invested the £10K in effective training, it would be more cost efficient.

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By johnjenkins
30th Apr 2012 10:08

If I remember rightly

tax was used to raise money for wars. So really we could be called contributors for the normal day to day stuff and when the government want to go to war we could be called tax payers or when they put £10b in a euro fund we could be called "mugs".

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7om
By Tom 7000
30th Apr 2012 11:35

Donors

I think you have it all wrong HMRC are really like a charity. We give money to them so they can do good, like WWF or RNLI. Only they do good for lots of things not just one topic, so shouldnt we be Donors...

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By The Black Knight
30th Apr 2012 11:40

different approach

We have always asked if clients need to complete a tax return (when it seems to be of not much use and in advance of the year in question). And have always been told that if a return has been issued then it must be completed !

However this year we have seen returns issued, not filed and penalties issued, only for the return to be cancelled following an outburst from the tax payer that it is unfair that they should have to complete a return (and most likely had income that should have been returned). HMRC have taken these outbursts at face value and removed taxpayers from self assessment.

Sometimes you have to wonder whether HMRC live in an alternative universe as the plan seems to be NOT to collect tax ?

Whether you have any additional tax to pay (and need to notify) is not the point. If a return has been issued then it should be returned or complained about sooner than after the filing deadline !!

I wonder how many of these cancelled tax returns turn out to be tomorrows missing traders as more of the economy moves underground.

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Replying to Tom 7000:
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By bosclibby
30th Apr 2012 11:56

Not the case Black Knight!

Not really applicable when the Return issued was, for example, a 2011 Partnership Return when the Partnerhsip ceased in 2009/10 or earlier. This happens every year in my experience (an HMRC blindspot) and was the case in the two incorrect daily penalty notices we received.

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By Asimpsoni
30th Apr 2012 11:40

Same old same old.....

 'There are over 9m taxpayers in Self Assessment . Unfortunately with a project of this scale things will very occasionally go wrong. We make every effort to minimise mistakes but when they occur we sort things out as quickly as possible.'

So we are just supposed to accept yet another poor effort just because their system is so big - why can't they extend the same empathy when we have the occaisional oversight and just man up when they make a mistake and say 'Hands up we have screwed up AGAIN'

As for the customer thing - whatever happened to the customer always being right?

I am so bored with the HMRC holier than thou attitude - but it will never change whilst there is a monopoly - where is the motivation for change when your customers can't change suppliers.

 

 

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By doorsteps
30th Apr 2012 11:46

Funny how articles such as this one never actually come as a surprise to me anymore.

 

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By mewsans
30th Apr 2012 11:49

Daily penalties

Last week a couple of clients of mine received notice of DAILY penalties relating to returns filed late (online not paper). What happened to the three month period?

When I called HMRC they said it was an error and the penalties had already been cancelled which is fine but they should never have been raised.

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By wyoming
30th Apr 2012 11:54

"Customers"

HMRC can use the term "customers" as much as they like, but I will never call myself an HMRC customer and I will never refer to my clients as HMRC customers either.

If I could take my "custom" elsewhere that would be another thing. I liked the post that I saw on another forum which suggested that we could take our "custom" to a more efficient tax regime (say Australia or Ireland), they could agree our liability under UK rules and then forward our payment or repayment details to HMRC (for a suitable admin fee of course). 

 

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By ccassociates
30th Apr 2012 12:21

Sacked

If continual errors on this magnitute happened in the private sector someone would get fired. Im beginning to get tired of whingeing civil servants who evidently are fire proof constantly underperforming at our expense. How many of us will now have to waste time explaining HMRC errors to our clients, again

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Replying to Tom 7000:
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By chatman
30th Apr 2012 12:36

"whingeing civil servants"

ccassociates wrote:
whingeing civil servants who evidently are fire proof constantly underperforming at our expense.

That's no way to refer to Wild Billy.

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Replying to Tom 7000:
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By Trevor Scott
01st May 2012 22:28

...

ccassociates wrote:

If continual errors on this magnitute happened in the private sector someone would get fired. Im beginning to get tired of whingeing civil servants who evidently are fire proof constantly underperforming at our expense. How many of us will now have to waste time explaining HMRC errors to our clients, again

 

You have to be careful how many times you do that because the Revenue's performance soon becomes unbelievable, with the implication that you are the real problem.

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By mrshah
30th Apr 2012 12:39

acting on lessons learned from this error

It appears normal for the HMRC, Politicians etc to use a defence as "learning from their errors".

 

What are the chances of the taxpayers, jo Public using it as a valid defence!!

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By pawncob
30th Apr 2012 14:34

Too many turkeys at HMRC.

What is an agent stakeholder when it's at home?  Does he represent "customers"?

Any humans left at HMRC?

Too much gobbledegook.

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Replying to Plantsman:
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By danbrown
05th May 2012 17:45

"Stakeholders" is almost as irritating as "Customers"

pawncob wrote:

What is an agent stakeholder when it's at home?  Does he represent "customers"?

 

Abby's new assistant on NCIS                   Agent Van Helsing

 

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By childrenintouch
01st May 2012 17:36

HMRC incompetence

When I was an Inspector in the Revenue, I said years ago that when the likes of me were all gone they would get the department they deserve.  I was dismissed 2 years ago for just doing my job, which involved looking at some records which "they" did not accept was allowed.  How HMRC has deteriorated in the last couple of years, because they  have got rid of so many experienced people, and have not realised that computers cannot replace them.  Computers do not have common sense and judgement, and unfortunately nor do most senior managers! I can hardly wait to see what a mess they make of RTI.

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