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image of sad man surrounded by boxes | accountingweb | Taxpayer sold his house to pay HICBC and penalties
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Taxpayer hounded into selling home to pay HICBC

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The pressure HMRC put on a dyslexic taxpayer to immediately settle high-income child benefit charges cost him needless ‘financial loss and distress’.

30th Apr 2024
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The high-income child benefit charge (HICBC) continues to astound and appal regular observers, as illustrated by the first tier tribunal (FTT) case of Benjamin Erridge (TC09122)

Judge Anne Redston was able to rein back some of the madness but regretted that there were limits to what the tribunal could do. 

Many elements of this case fall into a familiar pattern. 

Erridge is dyslexic, with very poor reading skills. He was, until 2020, a PAYE employee receiving salary, benefits and bonuses. He and his wife have three children, born in 2002, 2008 and 2013, for whom Mrs Erridge claimed child benefit.

When the HICBC was rolled out in 2013, Erridge’s adjusted net income (ANI) was below the £50,000 threshold. From 2013/14 onwards, his earnings crept above the threshold, and in 2020 he became self-employed.

Nudge letter

HMRC sent Erridge a “nudge letter” in January 2021, to which he replied with a handwritten letter asking for assistance, but received no response. He sent what information he could to HMRC. In June 2021 HMRC advised him that he appeared to owe HICBC for the years 2012/13 to 2018/19.

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Replies (48)

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By Paul Crowley
30th Apr 2024 14:25

Sounds as if this self-employed person did not have an accountant. He really should have taken advice at the time.

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Replying to Paul Crowley:
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By KennethMennie
30th Apr 2024 15:06

FTT wrote:

In 2020, Mr Erridge became self-employed. He knew he would need help with the tax
system because of his dyslexia, and he appointed MCO Accountants Ltd (“MCO”) as his agent.

The self-employment started after the HICBC charges.

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Replying to KennethMennie:
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By Paul Crowley
01st May 2024 09:32

He did not talk to an accountant when HMRC came knocking on the door to collect money.
My guess is that he DIYed his self employment.

He panicked rather than ask for help when HMRC wanted the money that he owed.
He knew he owed the money in Jan 21.
There was a long gap after being told he owed money and HMRC coming to collect. Lots of time to save up, or make plans to borrow.
I do not buy the story of selling at undervalue, unless he had a bad sales agent. My belief is that he was already struggling with the mortgage. He would not afford the increases in interest rates, having borrowed when he was way over £50K income, and the self employment was a lot less, (hence no more HICB).
Who in their right mind would sell the family home to pay a tax liability.
The taxpayer made bad decisions. Those were his fault not HMRC's
I blame the tribunal system for Wilkes type cases.

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Replying to Paul Crowley:
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By graydjames
01st May 2024 09:54

Your comments should be called out for what they are: nasty, spiteful and unfair.

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Replying to graydjames:
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By Paul Crowley
01st May 2024 11:21

His accountants gave him the advice that he should sell his house at undervalue?
If so then they would be getting a PII claim.

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Replying to Paul Crowley:
By Duggimon
01st May 2024 09:56

Paul Crowley wrote:

He did not talk to an accountant when HMRC came knocking on the door to collect money.
My guess is that he DIYed his self employment.

Why guess that when the posted you're replying to has cited the facts of the case showing you are wrong?

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Replying to Duggimon:
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By Paul Crowley
01st May 2024 10:05

So what did the accountants advise, if he indeed did talk to them.
Did they really advise to sell the house?

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Replying to Paul Crowley:
By Duggimon
01st May 2024 11:51

You clearly don't have any clients similar to the taxpayer in this case, I do and am entirely unsurprised at his actions. I have maybe half a dozen clients that, were they to get in a mess like this, I could imagine contacting me, suggesting selling their house to pay an overinflated tax bill, having me advise against it and still going ahead because of the stress.

Not everyone is able to fully understand HMRC's role, the extent/limits of their powers and this lack of understanding often manifests as fear. There is a limit to how much an agent can mitigate that fear and HMRC's tactics are, in my opinion, deliberately designed to target and play on that fear to strong arm people to get the result HMRC wants.

The transcript of the case and the account of the surrounding events include a long list of failures of HMRC to act appropriately but you're choosing to focus on him either not appointing advisors (he did) or panicking when he didn't need to and not on HMRC's numerous failings.

I mean that's fine, clearly the taxpayer did make mistakes, but it comes across quite callous to blame him for them and not HMRC who forced his hand in ways that really seem predatory.

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Replying to Duggimon:
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By Karen whitehead
01st May 2024 13:37

absolutely agree. I have a lot of clients that are absolutely terrified of HMRC. I also have clients that struggle to read and one who has now retired used to call me so that I could read out any correspondence to him over the phone. Another now passed away who was terrified to open brown envelopes and so didn't.

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Replying to Duggimon:
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By Paul Crowley
01st May 2024 11:56

26. In 2020, Mr Erridge became self-employed. He knew he would need help with the tax
system because of his dyslexia, and he appointed MCO Accountants Ltd (“MCO”) as his agent.
The correspondence and the assessments
27. On 7 January 2021, HMRC sent a letter to Mr Erridge asking him to check whether he
was liable to the HICBC. HMRC call this type of letter a “nudge letter”. It does not tell the
recipient that they have a tax liability but is intended to “nudge” them into taking action.
28. Mr Erridge replied. His letter is handwritten on lined paper and began:
“I am requesting P60 and P11D as these have been requested to check High
Income Child Benefit. Unfortunately I do not have my own records as lost.”
29. Mr Erridge then listed the same years as in those set out in the nudge letter, added his full
name, date of birth, NINO and his previous address, and ended by saying “thank you for your
help in this matter”. HMRC received that letter, but for whatever reason, never replied.
30. When Mr Erridge did not receive a response, he tried to work out what his HICBC
position was. He was able to access some of his earlier employment earnings from an online
portal, but only for the most recent years; he also found his original contract of employment
which gave his starting salary. He did his best to complete the figures for each year based on
that research, and sent them to HMRC. That letter was not in the bundle but there was no
dispute that it was sent.
31. On 24 June 2021, HMRC issued a further letter to Mr Erridge. It began:
“Our records show that the changes to Child Benefit for people on higher
incomes may apply to you. However, you did not register to receive a Self
Assessment tax return for the tax years ended 5 April 2013, 2014, 2015, 2016,
2017, 2018 and 2019.”
32. The second page of the letter set out the amounts Mr Erridge was “due to pay” based on
HMRC’s estimate of his ANI for each of the relevant years; that estimate totalled £15,374. Mr
Erridge called HMRC immediately on receipt, asking what he had to do. He was told HMRC
had suspended work on all HICBC cases, and he would be contacted in due course.
33. On 10 November 2022, over a year later, HMRC wrote to Mr Erridge, saying that his
case had been on hold as the result of an Upper Tribunal (“UT”) judgment to the effect that
HMRC did not have the power to issue discovery assessments in HICBC cases. That case was
HMRC v Wilkes [2021] UKUT 150 (TCC) (“Wilkes”). HMRC’s letter went on to say that “the
government has amended the legislation” and Mr Erridge would now be issued with
assessments.
34. A second letter of the same date enclosed seven HICBC assessments for the years

This reads as if the taxpayer chose not to use the accountants when first advised via nudge letter that there was an issue. He wrote his own letter by hand.
In June 21 HMRC told him how much was owed.
When did the accountants get involved in this?

Thanks (3)
Replying to Paul Crowley:
By Duggimon
01st May 2024 14:21

To me it reads as if HMRC did everything they could to ignore and prevaricate until able to issue a demand for immediate payment of as much money as possible and in his naivety the taxpayer made multiple errors, none of which may have seemed like errors at the time.

Why would he assume that on receipt of a letter from the government about a subject about which he knew nothing, a response in kind with the information he had available and a request for help would be inappropriate? That seems entirely appropriate if you don't know that HMRC are incompetent predatory liars and he quite likely didn't initially mention it to the accountants he engaged as a result of going in to business but thought his response would help get to the bottom of things.

You seem to be going out of your way to read between the lines that this person is being dishonest about the events resulting in this and is exaggerating or lying about how bad HMRC's approach has been when in my experience it's entirely in keeping with what we know and deal with daily. I don't understand your point.

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Replying to Paul Crowley:
By trecar
01st May 2024 10:37

From your comment you are obviously an agent for HMRC and not taxpayers. I surmise that because you seem to show a total lack of empathy with either the facts of the case or an understanding of them. That the FTT chose to side with the taxpayer and not HMRC illustrates that they consider HMRC abused the process to seek advantage. Something that the proposed cancellation of the phone helplines amply highlights. This case is just one more example of how broken HMRC is. It is about time it got adequate management who told its bosses (HMG) the facts of life.

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Replying to Paul Crowley:
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By Jane Wanless
30th Apr 2024 15:13

The article suggests that the taxpayer didn't become self-employed until 2020, and that he first went over £50k due to a bonus. As a PAYE taxpayer without notification of the introduction of the charge, it's understandable that he didn't know.

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Replying to janewanless:
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By Paul Crowley
01st May 2024 09:56

But he took no advice when HMRC came looking for money.
See above.

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Replying to Paul Crowley:
By Duggimon
01st May 2024 09:57

By "see above" do you mean KennethMennie's post confirming he took advice when HMRC came looking for money?

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Replying to Duggimon:
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By Paul Crowley
01st May 2024 12:26

Maybe you need to read the case.

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Replying to Paul Crowley:
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By rememberscarborough
01st May 2024 10:53

Possibly he was scared of accountants. When you have no faith in your mathematical ability having someone "spouting" figures at you, without taking your disability in to account, is scary. Even my missus, who's a very intelligent woman, hates dealing with car mechanics because she doesn't have any mechanical knowledge and feels they talk down to her.

Maybe accountants should look at how they deal with clients before criticising taxpayers like this poor soul who's been let down very badly by tax professionals.

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Replying to rememberscarborough:
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By Paul Crowley
01st May 2024 11:23

Was he let down?
Where did you read that?

Did he really take advice about this debt and follow that advice? If so a PII claim would be a walk in the park.

If he was too scared to ask or take advice from his accountants then he should have shopped around to find someone that he is comfortable with.

Are you accusing his accountants of spouting figures and acting aggressively to someone with a disability? I am sure that they would be interested in your suppositions.

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Replying to Paul Crowley:
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By Joe Alderson
01st May 2024 14:46

He was let down by HMRC who failed to respond to his request for information and assistance.

Should a person need an accountant for assistance with a personal tax matter when they've request assistance from HMRC?

Of course, we know that it would be wise to contact an accountant about a letter like this from HMRC, especially if you already have one, but not everyone thinks logically in such a situation.

Additionally, it is reasonable IMO, for the average individual to assume that a request for information and assistance made to HMRC would result in the requested information and assistance being provided.

Could this individual have done more to protect himself? Yes. Is it unreasonable for him to have asked HMRC for assistance? No. Is it unreasonable for HMRC to not respond to his request? Yes.

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By JustAnotherUser
30th Apr 2024 14:58

yes the largest issue for me is that HMRC falling on some random campaign of awareness is enough for the average tax payer to know these things...

". In January 2014, HMRC issued a press release about HICBC, but the Tribunal had no
evidence as to how that press release was disseminated or otherwise published and we could
make no related findings of fact."

.... I know many who are in this trap, examples include people who have partners for years but live apart, where one partner is a parent and another is not... they move in together and boom, Charlie Bloggs with no Kids now has to pay HMRC £3k a year for the £3k that his partner claims!

Alas, they should have seen that 1 inch advert they took out in the sun 10 years ago.

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Replying to JustAnotherUser:
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By Paul Crowley
01st May 2024 09:59

Is the average tax payer meant to now that there is tax on rental income?
Most 'do not know' that cash in hand does not mean tax free.

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By Capitalised
30th Apr 2024 17:05

This case has made my blood boil. This really goes to show how our systems are set up for a narrow band of people with specific capabilities. Hope his lawyers can help him there.

The tax system is far too complex. Simplification would help reduce much of this.

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Replying to Capitalised:
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By Anthony G Thorne
01st May 2024 17:30

This clearly shows how really out of touch HMRC is with reality and cannot use common sense.

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By FactChecker
30th Apr 2024 17:13

"They (increases in thresholds from the recent Budget) do not, however, do anything to protect against the predatory behaviour of HMRC when pursuing these charges."

Predatory .. is extraordinarily understated for this story.
Mean-spirited? (not strong enough)
Malevolent? (closer)
Inhumane? (spot on)!

Hope he can find pro bono representation to take them to the cleaners ... it's just unfortunate that, even if he does, no-one is going to name & shame (let alone prosecute) such egregious behaviour all the way through the farce by HMRC individuals.

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By AdamJones82
30th Apr 2024 19:33

I have the utmost sympathy. Just over 10 years ago NatWest contacted me and said my supposed flexible mortgage where I could pay interest only initially was somehow 25k behind plan. I too panicked and sold for well under market value as I had other things going on in my life clouding my thoughts.
5 years later they tracked me down and said a computer error meant me and other customers had been advised incorrrctly. I got a derisory £5k compensation payout

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Replying to AdamJones82:
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By Postingcomments
01st May 2024 09:44

If the mortgage was interest only, couldn't you have quickly estimated the amount of interest using the rate and the mortgage amount? That's within the capabilities of an accountant, is it not? Asking questions and going in to bat. That's something accountants should be able and willing to do when needed isn't it?

What am I missing here?

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Replying to Postingcomments:
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By AdamJones82
01st May 2024 10:07

You don’t know what was and still is going on in my life you unsympathetic Berkeley hunt

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Replying to AdamJones82:
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By Postingcomments
01st May 2024 10:11

Selling the house sounds like more work than doing the calculation. It has likely also added to your woes. But, yes, what do I know.........

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By PAULLEWISFCCA
01st May 2024 09:50

HMRC = collection arm of a giant extortion racket ?

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Replying to PAULLEWISFCCA:
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By Tom+Cross
01st May 2024 09:59

I'd go so far, as to say, Post Office Limited, on steroids.
And Sir Harra sits back as though everything in his garden, is thriving.
Sometimes, when I hear how low this country can go, I just want to wretch.

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Replying to Tom+Cross:
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By Paul Crowley
01st May 2024 10:13

This is bigger than going to prison?
Really?

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Replying to Paul Crowley:
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By Tom+Cross
01st May 2024 10:42

"The pressure HMRC put on a dyslexic taxpayer to immediately settle high-income child benefit charges cost him needless ‘financial loss and distress’"

If that's the nuance that you read into my comment, so be it. My reaction was; the nation is currently administered by a series of incompetent and insensitive civil servants, and from your responses, I half assumed that you were one of their number.

The Post Office, HMRC and a variety of other Government agencies (have you ever dealt with the DWP?) couldn't give a flying fig as to how their reactions, might affect others. Particularly those with disabilities. Treat yourself, watch "I, Daniel Blake" sometime.

Lessons in life I do not need from someone who seems to have the compassion of ....................

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Replying to Tom+Cross:
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By KS1711
01st May 2024 12:46

Tom, I have also watched "I, Daniel Blake" and it's a very emotional watch. It's despicable how the Government are still getting away with the treatment of vulnerable people.

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Replying to Paul Crowley:
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By rememberscarborough
01st May 2024 10:57

The fact that he "panicked" shows he clearly thought that HMRC might try to hit him with criminal charges and a possible prison sentence. Maybe HMRC are quite happy for people to think this?

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Replying to rememberscarborough:
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By Paul Crowley
01st May 2024 11:40

Making stuff up now?
Debtors prison is from a Dickins book.
If he thought that then clearly he did not talk to his accountants

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Replying to Paul Crowley:
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By Capitalised
01st May 2024 14:26

Paul - my husband is severely dyslexic. He is an incredibly intelligent person but unfortunately his school let him believe otherwise.

Once he reached his 40s, he was diagnosed with dyslexia, given more time in his professional exams and secured a promotion. In his early 50s he still carries a lot of the disbelief in his own capability for written correspondence/reading.

As a professional adviser I can see how he is frankly terrified of any dealings involving correspondence/reading. It is from a lifetime of being cowed by a system. This makes any financial dealings almost impossible with e.g. HMRC/banks etc. This would also involve dealing with any accountant that he wasn't married to.

There are millions like him - our system needs to reflect this.

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By SBACCA
01st May 2024 10:09

Absolutely typical of HMRC not to reply to his request for help, but suddenly when they can be bothered to act everything must be done on their timescale. Feel sorry for the taxpayer. I'm not debating that he owed the tax, but in my opinion the penalties were unreasonable and unfair. Very often one parent claims the CB and another is liable for the tax, can even be the case that the pair are unaware of the others role. Should be based on the income of the home.

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By JCresswellTax
01st May 2024 10:24

When I read the heading I thought 'It was his own fault'.

After reading the detail, he tried to sort this out and as usual, HMRC were absolutely no use.

Bit extreme selling your house to settle a £4k liability, but it proves that some people really panic when HMRC come calling.

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Replying to JCresswellTax:
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By Andy Keates
01st May 2024 10:37

Actually a £19k liability (£15k HICBC + £4k penalties) at the time he sold the house. After the FTT had ruled on the case, it ended up at only £2.5k (the 2018/19 assessment).

That's why the judge was so unhappy that liabilities had not been postponed pending settlement of the appeals, and why she was so annoyed that there wasn't a damn thing she could do about it.

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By Mike Warburton
01st May 2024 10:42

I contacted HMRC about this case a couple of weeks ago when it was released and asked whether they were going to apply ESC A19. They denied that this is what the judge was recommending !
If you have not yet read the judgement I recommend that you do so and see if you agree with them.
Incidentally, I have also spoken to Keith Alden who represented Mr Erride at the tribunal. So far I can find not a single redeeming feature in the appalling behaviour of the HMRC staff involved in this terrible case.
We are indeed fortunate to have in Anne Redston a judge possessing exceptional tax experience, a fair mind and the courage to criticise HMRC when they behave in this way.
Mike

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By Casterbridge Hardy LLP
01st May 2024 11:07

This poor chap is a sap - the very least that he could have done was to speak to the Citizens Advice Bureau who exist for exactly this type of scenario.

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By Tom 7000
01st May 2024 11:07

Its just a bad rule which relies on the man in the street having tax knowledge, when many of them have no clue. Same thing applies to removal of personal allowance at 100k when PAYE systems cant cope and people get battered for a random 5k.

It wouldn't be so bad if they answered their phones so you could at least talk to them about anomalies.

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By Pat Nown
01st May 2024 11:22

Some of these comments show a complete lack of understanding by professional accountants who are well educated about the reality of awareness of anything tax by many of the general public and in particular the comments of Paul Crowley are judgemental with no foundation. This is an article which has reported some but not necessarily all the facts of the case... but you Mr Crowley have conjectured 'My belief is that he was already struggling with the mortgage. He would not afford the increases in interest rates'.... very unprofessional

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By Justin Bryant
01st May 2024 14:56

At least the FTT heard the substantive appeal in the first place, unlike with these other poor sods who were royally screwed by HMRC: https://www.accountingweb.co.uk/any-answers/interesting-case-on-how-hmrc...

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By Mr J Andrews
01st May 2024 16:05

Goes back to previous comments I've made.
Dyslexia - or hyperlexia , - repeatedly complicating the legislation by vote seeking or purely whimsical or lack of foresight, tinkering Governments and this scenario will keep the FTT in jobs for life.

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By moneymanager
01st May 2024 17:21

Retrospective legislation is pernicious, we started that in 1945 by criminalising the twelve year prior membership of a political party.

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By moneymanager
01st May 2024 17:51

Power corrupts and absolute power corrupts absolutely, I have no faith left in any arm of government which of course is the point as when 'all the government's fall' the saviour of the One Wirld Givernment will emerge, then we really will be (word deleted in advance).

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By towat
02nd May 2024 08:58

Can't wait for the ITV drama series to come out, maybe then the Government will take action?

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