Save content
Have you found this content useful? Use the button above to save it to your profile.
stack of post | accountingweb | Tax agents nudged to correct provisional figures
iStock_jajmo_stack_of_post

Tax agents nudged to correct provisional figures

by

HMRC letters leave tax agents guessing which clients’ returns they need to review and correct for provisional figures, with pressure applied to correct all affected returns by 31 December 2023.

22nd Aug 2023
Save content
Have you found this content useful? Use the button above to save it to your profile.

HMRC frequently sends out standard (one-to-many) letters to groups of taxpayers and/or agents concerning specific issues, ranging from purely educational nudges to more serious prompts to correct errors or omissions in submitted tax returns. 

On this occasion, the letters dispatched during August 2023 relate to self assessment tax returns for 2021/22 which included a declaration that the return contains one or more provisional figures. 

However, instead of writing to the individual taxpayers directly, HMRC has written one letter to each tax agent who has multiple clients with provisional tax returns. But that letter does not name the clients concerned. 

HMRC has said it will provide the tax agents with a list of clients who have submitted provisional figures if the agent requests this information. We understand that the Unique Taxpayer Reference (UTR) number for each client on that list will be redacted.

Hobson’s choice 

Agents thus have a Hobson’s choice to either search through all of their clients who may have included provisional or estimated figures on their 2021/22 tax returns, or spend time asking HMRC for the list of those clients via the phone number on HMRC’s letter. 

The Association of Taxation Technicians (ATT) asked HMRC to provide the list of affected clients to agents upfront, rather than leave it to the agent to request the list, but this suggestion was ignored.

The ATT also asked that the letters should be copied to taxpayers concerned given that it is the taxpayer who bears ultimate responsibility for the accuracy of their tax return. HMRC also rejected this sensible suggestion.

It is possible that a rogue tax agent could include estimated figures on a client’s tax return and the taxpayer may not be aware of the significance of such an entry. 

What to do next 

If you receive one of these letters HMRC has asked you to respond by the following deadlines: 

  • 30 November 2023 – submit the amended return if the final figures are to hand
  • 31 December 2023 – submit an amended return even if you don’t have all the final figures.

These deadlines are not statutory, so you are not obliged to meet them. The HMRC spokesperson commented: “The deadlines we’ve given are based on feedback from agents who wanted us to remind them to make these amendments well in advance of the self assessment deadline, reducing their workload during the busy month of January.” 

HMRC has also asked tax agents to send a spreadsheet via email, setting out for each taxpayer the provisional and final figures and the difference between those figures. This request also has no statutory backing. 

When asked about the need to send a spreadsheet summary HMRC replied: “A spreadsheet is an easy way to record the necessary details, both for agents and for HMRC, so we can help people get their tax right.”

No further information

A responsible tax agent would include a note in the further information space on the tax return to explain why it has been necessary to include an estimated or provisional figure in the return. We don’t know whether HMRC will review any such notes before sending the nudge letter.

HMRC has not said whether it will also run a similar one-to-many campaign targeting unrepresented taxpayers who have submitted tax returns containing provisional figures. 

Why now?

We asked HMRC why it is running this one-to-many campaign now. The HMRC spokesperson confirmed that this is not a new exercise and previous reminder campaigns relating to provisional figures have been very successful. The incidence of provisional figures has not increased following the Covid-19 pandemic.

We questioned whether the provisional tax returns are concentrated in particular industry sectors, but apparently they are not. 

A good nudge 

In principle, it’s a good idea to remind tax agents to correct estimate figures included on tax returns, especially if the agent has submitted abnormally high numbers of provisional tax returns. 

The ATT is concerned about the number of nudge letter campaigns that HMRC is using. There is a special joint HMRC/tax practice one-to-many compliance advisory board (OCAB) that meets quarterly to discuss such campaigns, but not every nudge letter is reviewed by that board. 

To gain further feedback on HMRC’s one-to-many campaigns from ordinary members the ATT is organising a special-interest group to cover this area, which will meet online each month. Please email [email protected] if you are an ATT member and would like to join this group.

Replies (19)

Please login or register to join the discussion.

avatar
By More unearned luck
22nd Aug 2023 17:11

"Agents thus have a Hobson’s choice to either search through all of their clients who may have included provisional or estimated figures on their 2021/22 tax returns, or spend time asking HMRC for the list of those clients via the phone number on HMRC’s letter."

A Hobson's choice is no choice at all (eg you can have any colour of model T Ford as long as its black) its not a choice between two unpalatable things, which is usually called a dilemma.

The letter promises a phone call from HMRC to check on progress after merely a fortnight of the letter. This will be the best opportunity to ask for the list. I'm going to spend the interim compiling a list of my unanswered letters that are more than a fortnight old so that I can ask the caller how HMRC are making progress in answering them.

Thanks (5)
Replying to More unearned luck:
avatar
By Catherine Newman
22nd Aug 2023 17:30

Agreed. Another HMRC project "doomed" to failure. Just look at Kevin Ringer and my comments on the Agent Forum.

Thanks (1)
avatar
By Hugo Fair
22nd Aug 2023 18:49

The 'one-way street' mentality has now taken up full residence within HMRC:

1. "HMRC has written one letter to each tax agent .. but the letter doesn't name the clients concerned.
And (for any) list of clients (that is eventually extracted from HMRC), we understand that the UTR for each client on that list will be redacted."

2. HMRC said: “A spreadsheet is an easy way to record the necessary details, both for agents and for HMRC, so we can help people get their tax right” - forgetting to mention that an *extra* task is never an 'easy' task for agents.

Is it true that the concept of 'respect' is now a forbidden attribute within HMRC?

Thanks (4)
Stepurhan
By stepurhan
22nd Aug 2023 22:38

Morton's Fork is more appropriate than Hobson's choice. You have two options, but they both lead to the same result (in this case, wasting time trying to find out who HMRC are referring to).

The article also conflates estimated figures and provisional figures. Provisional figures will usually have some element of estimation involved, but not all estimated figures are provisional. We might ask a client to say how much of their mobile phone use is for business purposes for example. Unless they have tracked calls, the resulting figure will be an estimate. It won't be one we are expecting to "correct" on an amended return though.

The letters themselves are a joke and a waste of HMRC resources. Agents will either ignore them, or ask HMRC to provide the list. Providing the list with the letter would have saved everyone time.

Thanks (5)
Replying to stepurhan:
avatar
By Catherine Newman
23rd Aug 2023 08:06

Where a % estimate has been made, I wouldn't tick the estimated box. It would be standard practice to provide %. My few provisionals are filed around 31 January with known figures and an estimate of the unknow to get the client out of chokee.

Thanks (1)
Replying to Catherine Newman:
Stepurhan
By stepurhan
24th Aug 2023 11:01

I agree that the box should not be ticked for standard estimates, such as the one I mentioned. I was just pointing out the article was not clear on the distinction.

Thanks (0)
avatar
By Catherine Newman
23rd Aug 2023 07:42

Surely we Agents know for whom we have submitted provisional returns. I have to do one where the client is due a refund of FICO but he is a partner in a partnership dealt with by another firm so preparation of the accounts for the year ended 31 December is completely out of my control. The firm provide me with an estimate and then the accounts when they are ready.

Thanks (3)
Replying to Catherine Newman:
avatar
By johnjenkins
23rd Aug 2023 13:52

Spot on.

Thanks (0)
avatar
By LJCASE
23rd Aug 2023 09:54

And the cost to the taxpayer of this wasted time? Wasted cost of paper and postage.

I thought HMRC were trying to reduce phone calls, transferring staff onto dealing with outstanding post or did I miss something somewhere?

Obviously there must be some staff with nothing to do.

This bit made me smile: "The deadlines we’ve given are based on feedback from agents who wanted us to remind them to make these amendments well in advance of the self assessment deadline, reducing their workload during the busy month of January"... hands up anyone who has suggested this to HMRC?
No.. thought not.

'More unearned luck' has the right idea.

They should be dealing with such outstanding post as for my client who has been waiting a year for a tax refund (despite many phone calls/emails/moans from me).

Thanks (1)
avatar
By why always me
23rd Aug 2023 10:16

HMRC replied: “A spreadsheet is an easy way to record the necessary details, both for agents and for HMRC, so we can help people get their tax right.”

Can this be forwarded to the MTD colleagues:)!

Thanks (4)
Replying to why always me:
avatar
By Homeworker
23rd Aug 2023 14:22

[quote=why always me]

HMRC replied: “A spreadsheet is an easy way to record the necessary details, both for agents and for HMRC, so we can help people get their tax right.”

I do actually maintain a spreadsheet to keep track of tax return progress, as it is easier to make notes on it, including where a return has been filed with provisional figures, so that I can amend it later.

Thanks (1)
Replying to why always me:
avatar
By dancingbubbles
23rd Aug 2023 23:04

Isn't a spreadsheet also an easy way to publish the 'necessary details' to anyone who intercepts the email?

Thanks (0)
By ireallyshouldknowthisbut
23rd Aug 2023 11:06

Well that's one of the more pointless exercises by HMRC

HMRC "something is wrong"
Us "er, which something?"
HMRC "not telling you"
Us "er ok, well let us know when you have something more concrete, and we will talk"

Thanks (3)
Morph
By kevinringer
24th Aug 2023 10:04

Given the statutory deadline for amending 2022 SA Returns is 31 January 2024, on what statutory basis do we have to take any notice at all of HMRC's requests to amend beforehand, or of compiling and sending them the spreadsheet?

Why has HMRC decided to do this for 2021-22 and not prior years? My suspicion is there are many provisional 2019-20 and 2020-21 provisional returns for which the final deadline has passed and HMRC should now be chasing, but HMRC isn't chasing them. So why spend resources chasing something that is not overdue whilst at the same time failing to chase what is overdue?

All HMRC departments have unacceptable processing backlogs and phone queues, so where di HMRC find the staff to run this campaign? I would have preferred it if HMRC used those staff to tackle some of the processing backlogs, or answer the phone.

Why does HMRC require a spreadsheet at all? HMRC know which returns are provisional, and will know the corrected figures when submitted. So HMRC will have all the information they request on the spreadsheet. The fact HMRC have requested the spreadsheet suggests HMRC is, yet again, failing to make use of data it already has.

What is HMRC hoping to achieve from the spreadsheet comparing provisional figures with final figures? 2021-22 many businesses were still badly affected by Covid and provisional figures might have been complete guesses because there was so little to base them on because 2020-21 was an exceptional year too.

Thanks (1)
RLI
By lionofludesch
24th Aug 2023 18:15

Agents file provisional returns and don't keep a record of what needs to be reviewed??

Gosh.

Thanks (0)
Replying to lionofludesch:
avatar
By johnjenkins
25th Aug 2023 09:07

Sign of the times and it will get worse. Still I'm sure MTD, the cloud, AI etc. etc. will sort out all problems.

Thanks (0)
Replying to johnjenkins:
Morph
By kevinringer
25th Aug 2023 09:24

You've got a great sense of humour John.

Thanks (1)
avatar
By Catherine Newman
25th Aug 2023 10:44

An amended return supersedes a provisional return. Who thought up this nonsense about spreadsheets.

There might be an issue where there has been a change of Agent and the software doesn't recognise it as an amended return.

Thanks (0)
By mydoghasfleas
25th Aug 2023 11:35

Why are we surprised?

Some years ago I wrote to HMRC at the address on their letter. When I called asking for the response, I was told I had sent it to the wrong address. The correct address was advised on the back of the envelope used to send the letter.

As so many letters only have postcode, I believe technically there should be at least one line of address and a post code, no email address or phone number and it take up to 3½ years to get a reply, would it make any difference if you did reply by 31 December 2023, perhaps it is amended to 2026 on the back of the envelope.

Thanks (0)