NAO warns HMRC about real time payroll plan

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HMRC failed to collect £9.6bn of VAT in 2010-11 and has widespread error and fraud in the payments of personal tax credits, according to a report by the government's independent auditors.

The £9.6bn figure is one third of the total estimated "tax gap", according to the NAO, which gave a mixed verdict on HMRC's 2012-13 accounts.

The watchdog also found that HMRC does not does not carry out comprehensive checks of company's VAT returns. And HMRC lacks a plan to deal with the threat of VAT losses due to online trading.

For the thirteenth time, the NAO gave a...

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About Nick Huber

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I’m a specialist business journalist and have a particular interest in tax and technology. 


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08th Jul 2013 12:14

Lies, damned lies, and statistics.


 The summary of the National Audit Office report again refers to "Cost" savings by HMRC.  But, this is a straightforward lie.

 None of the figures quoted by NAO or HMRC take into account the costs incurred through professional tax swervices rendered by firms of accountants and others.

 One simple example- The PAYE fiasco- NAO quotes that it cost HMRC less than expected. Has anyone asked how much taxpayers paid their accoutants to sort out  PAYE problems, and or how much time we advanced pro bono.

 The simple truth is, in this matter, accountants are similar to dentists. Our clients pay us for help and or advice re tax, simply because a little pain (our fees) is preferable to a big (Taxman) pain in the Butt[***], if the problems are not sorted.

 Clients do not exclaim, "Hey let us buy the new model 2013 accountant", or lets have a night out visting our accountant on a tax matter.

 I guess anything between 90% (one-man band sole practioners) to 30% (The big Four) accountancy practice fees are related directly to facilitating UK taxpayers' tax affairs. How much did RTI implementation cost our clients, including our fees? never mind the time we wrote off to goodwill.

 Over the previous three decades the growth in the accountancy profession has largely been fertilised by government legislation, not by any intrinsic beauty in an income tax return..

 Except and unless the NAO and similar start to take these items into account a halfway accurate estimate of the costs of our "Wallis & Gromit" designed tax system is not possible.

 Like Topsy "It just growed".



Thanks (1)
By djtax
10th Jul 2013 15:35

Why do we always end up sorting out the mess created by HMRC?

For almost a decade I have been going out of my way to give HMRC constructive feedback - with real client examples - of the total botch they have made (and sadly still are making - three recent examples turned up just this week) of the PAYE system. In almost all instances it is down to incorrect PAYE Codes in cases where the client has more than one PAYE source (eg a pension and a salary, or two separate pensions). For existing clients we can often pick up the problem and get it corrected promptly, but not so for taxpayers who decide to seek professional help only once HMRC have wreaked the damage. I have little confidence that RTI will do much to improve PAYE Coding problems.


Over the years I have raised this issue repeatedly at our local Working Together meetings and even sent a pack of several examples direct to Dave Hartnett some years ago, in reponse to an appeal he made for feedback (his office acknowledged receipt but the promised reply never arrived). I doubt I am the only accountant to have raised such concerns. Why then do the problems still occur? Why do HMRC persistently ignore our feedback?


Where I have assisted taxpayers unravel PAYE muddles, whilst welcoming the extra fees I have nevertheless felt a strong sense of injustice - such people would not have to seek and pay for professional help if HMRC got their act together in the first place. On the odd occasion I have succeeded in getting HMRC to reimburse the client, but the process is tortuous and often adds to time costs that are not fully recovered. A straw poll conducted a year ago indicated that many accountants end up writing off some time on these issues. Why should we sort out HMRC's c**k-ups unpaid?  As a profession why do we let HMRC get away with it?

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By DMGbus
10th Jul 2013 17:22

Working Together? (or NOT?)

"As a profession why do we let get HMRC away with it?"

Is a very good question.

"Working Together" appears to an arrangement to present a picture of HMRC being responsive to problems encountered by the profession.

Now, one issue raised a year or two ago was long delays in CIS refunds for Ltd Companies.

I can't see that anything tangible has been achieved here on this CIS tax repayment issue judging by recent postings on AWeb.

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11th Jul 2013 05:40

ANyone experienced this?

An employer diligently sent in RTI filings on time; still rececived a letter from Debt Maangement for non payment.

On checking it was found that HMRC had received the RTI filing (nothing topay) but the data hadn't ported from HMRC's RTI system to the Employer's record!

So, as above HMRC c**k up, resulting agro and another twenty minutes trying to get through to sort out THEIR mistake.

Whose cost savings?


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By DMGbus
11th Jul 2013 08:41

RTI is being currently tested by small employers

In effect small businesses forced to join RTI as of 6 April 2013 are currently being used as "guineau pigs" - they are effectively testing HMRC's RTI implementation and finding the bugs in the poor implementation.

A number of problems have been, as a result, found out for HMRC by employers and their accountants, here's a some of those that I have discovered for HMRC:

# Duplicate employee records created in error by HMRC (one employee with a single employer gets two PAYE codes for the same employer)

# Incorrect record of PAYE/NIC liability at Collector of Taxes end - higher than at Employers Helpline end

# Incorrectly issued BR and D0 PAYE code numbers

# Month 1 PAYE payments initially recorded as month 2 payments, then at a later stage an illogical partial re-allocation made by HMRC of some of month 1 tax/NIC to month 1 from month 2

It is assumed that HMRC's implementation strategy is designed to ensure that when large employers join RTI in October 2013, the problems encountered by small employers will have been fixed - HMRC could probably NOT have coped with putting right all of the problems that I've outlined if every employer had joined RTI as of 6 April 2013 - put quite simply millions of incorrect PAYE codings and liability records would most likely have broken the system into total anarchy (one national big-name accountancy firm has recently advised to do what I am doing with incorrect PAYE codings - ignore them - problem is not all employers or payroll processing firms can instinctively recognise the incorrect PAYE codings and as a result I hear stories of irate employees having BR tax code applied instead of correct 944L and employers having to placate employees by making them loans of the over-deducted tax). 





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16th Jul 2013 22:29

It's a mess

It was always going to be a mess and it is a mess.  it was a no-brainer that a separate RTI helpline was going to be needed, and of course as usual the HMRC numpties took the decision in the "no brain" direction not to bother.

I don't bother even trying the useless helpline, as it's 20 minutes or more to get to speak to some clueless wally whose primary objective is to pass the buck or do nothing.  So that's three letters sent this week on submission errors and so on, three letters to clog up the system with but at least I have evidence that I have brought the system failings to HMRC attention which of course you don't get by a twenty minute "waiting on the telephone" scenario.

In the agent survey two weeks ago I gave 2 out of 10.  I wish I could re-do this in the light of this last 10 days so I could give a fairer mark of either 0 or 1.

Also, why the hell should anyone be required to file RTI when they've not even done any payslips?  Why is the profession not kicking up about this?  I believe this one measure is in there just as a pure cash cow from 2014-15 onwards, just like CIS is a cynical fine and slow pay cash cow.

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