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CGT: 26,500 miss UK property return deadlines

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Almost 20% of taxpayers with gains to declare from UK residential property failed to report and pay the capital gains tax on time in 2021/22.

23rd Aug 2022
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According to HMRC’s figures, approximately 20% of taxpayers, who had gains to declare from UK residential property, failed to report and pay the capital gains tax (CGT) due on time in 2021/22.   

The CGT 30-day reporting and payment system for UK residential property came into effect on 6 April 2020, right in the middle of the Covid-19 pandemic, and with little publicity from HMRC.

Although late filing penalties for missing the 30-day deadline were waived for the first three months, and the filing period was doubled to 60 days with effect from 27 October 2021, the number of taxpayers who missed the deadline grew.   

Scale of the problem    

The latest CGT statistics show that approximately 137,000 UK property returns were submitted for residential property disposals in 2021/22, and HMRC estimates that 26,500 of those returns were filed late – nearly 20% of the total. In 2020/21 the volume of disposals was suppressed by pandemic, but 28% of the UK property returns were filed late.   

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Replies (68)

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the sea otter
By memyself-eye
23rd Aug 2022 15:08

I talk to many who have second properties - the lack of appreciation that CGT may be due on disposal is astounding - even amongst 'professionals'

Thanks (5)
Caroline
By accountantccole
23rd Aug 2022 15:33

Add it to the solicitors responsibilities - they will be dealing with the majority of these missing returns.

Thanks (14)
Replying to accountantccole:
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By Carol Jefferis
24th Aug 2022 10:13

Dealing with the majority of the disposals, not the CGT returns.

Thanks (5)
Replying to Carol Jefferis:
Caroline
By accountantccole
24th Aug 2022 11:34

Yes cases is what I meant - they ought to be at least warning the clients of the issue. Agree they probably aren't qualified to do the calcs -esp for my non residents

Thanks (0)
Replying to accountantccole:
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By Crouchy
24th Aug 2022 11:01

solicitors are useless, we've seen quite a few cases where solictors have only informed clients that a CGT return is due at the last minute and then only as a throw away comment

we've seen many people having a last minute panic because the return was due or that they'd invested the money and couldnt get at it to pay

this has really been for people who had self-assessed their rental income and then were lost with the CGT side

for our own normal clients, we've drummed it in to them to tell us as soon as property is selling, but still you get a few who are oblivious

Thanks (3)
Replying to Crouchy:
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By Brend201
24th Aug 2022 17:29

Yes, our experience with a solicitor was poor. Non-resident selling a property at a big loss. Solicitor never mentioned it, even though they didn't know if there was a gain or loss. Another advisor (in another country) mentioned it in passing - non-resident is required to file, even if there is a loss. I filed the return fairly easily though, but two days late. Got the penalty notice.

Thanks (1)
By ireallyshouldknowthisbut
23rd Aug 2022 16:00

One wonders how many more only reported on their tax return, and have never filed the pigging thing. Several hundred thousand more.

Wasted time today doing 2 of the little so and so's. Complete time waster, as both were BR tax payers with variable income. We have no idea how much it will be by the end of March, so impossible to work out the tax accurately. Also one of them might have a big capital loss coming up. Or might not if it doesn't sell.

Also if HMRC are now if you are correct chasing up 20/21 returns with CGT but no 30 day report and pay, what is the actual POINT of this? it seems to be purely about penalty collection. The tax is already been computed and sent to HMRC via the normal tax return, so why do HMRC have the power to demand you fill in another form intended to collect the same tax bit earlier, just so they can fine you as its late?

That will make a very good tribunal case if someone takes it on. It seems to be a nonsense given the tax is paid and HMRC's job is to collect taxes.

Thanks (13)
Replying to ireallyshouldknowthisbut:
the sea otter
By memyself-eye
23rd Aug 2022 17:53

EVERYTHING HMRC does these day is about collecting penalties. It's easier than policing the system (bit like doing the macarena is easier than 'real' policing).
Stay in the middle of the shoal, keep your head below the parapet and fiddle away while Rome burns.
Right: I'm off on my boat, to far and distant welcoming shores where life is easier and dusky maidens twirl and dance for my delight (that'll be Nuneaton then).

Thanks (15)
Replying to memyself-eye:
the sea otter
By memyself-eye
28th Aug 2022 19:15

fourteen thanks!
err... stop cloging up my inbox... as the actress said to the bishop!

Thanks (0)
Replying to memyself-eye:
Morph
By kevinringer
29th Aug 2022 09:24

If the adulation is inconvenient, then just post nonsense instead, like HMRC do.

Thanks (0)
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By Kaylee100
23rd Aug 2022 15:56

30 days was pretty impossible to meet unless the seller knew about the rules on marketing so had extra time to prepare. 60 days is more sensible but 90 would be better. I think this reporting rule is a good one as it flags the tax with all not just SA cases, although many will be in SA.

I've just completed an easy-ish case, 23 years ownership, who found out about the rules just before completion and approached me. We managed to file accurately and without estimates in 33 days. Obviously meeting the current deadline but illustrating how difficult it was under 30 day rules.

Agents and Solicitors need to flag this with sellers and where property transfers are made.

There have been practical issues with the tech on rollout and tax offset etc. That's typical of HMRC nowadays and that should have been better thought through. The digital handshake is ridiculous - particularly as most of my cases have been elderly people with very little digital knowledge. At one stage I had completed more paper returns than digital, although that's rectified itself now.

Thanks (4)
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By Open all hours
23rd Aug 2022 16:00

If I was a solicitor I would consider myself negligent if I did not inform my client of the filing schedule.

Thanks (16)
Replying to Open all hours:
the sea otter
By memyself-eye
23rd Aug 2022 17:56

If I were a carpenter (there's a song there) I'd build a big boat.
But I'm not. So I won't.
There again, maybe I will....

Thanks (3)
Replying to Open all hours:
Should Be Working ... not playing with the car
By should_be_working
24th Aug 2022 10:50

Open all hours wrote:

If I was a solicitor I would consider myself negligent if I did not inform my client of the filing schedule.


I wonder how many solicitors' T&C's exclude anything around CGT (if I have a moment I'll take a look at the one who we used for my parent's place).

In a similar vein, we exclude SDLT in our LoE and explicitly state that we expect this to be dealt with by the conveyancer/solicitor. Sure, we might flag it up in general terms to clients, but we're not getting involved in filing the SDLT returns, etc.

Thanks (1)
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By Hugo Fair
23rd Aug 2022 23:18

As a title, "26,500 miss UK property return deadlines" substantially undersells this story!

The actual statistics are "approximately 137,000 UK property returns were submitted for residential property disposals in 2021/22, and HMRC estimates that 26,500 of those returns were filed late".

So are we saying that 100% of due returns were filed (but some were late)?
Or is it more likely that an unknown number of further returns haven't even been filed?

And whilst we're on about penalties ... how about those who 'under estimate' the CGT and so initially pay too little? Or the indirect penalty of waiting forever for repayment of too high an estimate?

Thanks (11)
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By More unearned luck
24th Aug 2022 00:44

"According to HMRC’s figures, approximately 20% of taxpayers, who had gains to declare from UK residential property, failed to report and pay the capital gains tax (CGT) due on time in 2021/22."

The 20% is surprisingly low. Indeed it is:

"The latest CGT statistics show that approximately 137,000 UK property returns were submitted for residential property disposals in 2021/22, and HMRC estimates that 26,500 of those returns were filed late – nearly 20% of the total."

Your methodology omits returns not made at all, either due to deliberate non-compliance or ignorance of the obligation to make CGT returns.

Returns not made at all or not yet made should surely be brought into account? To only include returns filed after the deadline in your workings gives a misleading picture of the degree of non-compliance.

My understanding is that HMRC do not charge daily penalties on late CGT returns, although that may change now they have won Priory (which related to ATED returns).

Thanks (3)
Replying to More unearned luck:
By ireallyshouldknowthisbut
25th Aug 2022 14:15

Do we know for sure about the daily penalties? I thought they could only be charged if the client had a specific warning from HMRC about the deadline.

I know the Priory case was a bit odd, not least as both parties claimed the other party was doing them and so were aware of them. moreover in this case, if you file the 'missing' 60 day report after the SA return HMRC already have the data to assess the liability. The return is completely redundant other than for penalty collection.

Thanks (0)
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By bluebaron
24th Aug 2022 09:21

The percentage will be a lot worse for MTD for IT when it is brought in..!

Thanks (4)
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By chancewind
24th Aug 2022 09:42

The solicitors have a role to play in this. I happened to have a client who sold a property and just mentioned it to me two weeks after the sale. The solicitors said nothing had to be done and dismissed my query. So the main point must be solicitors to tell clients of their responsibilities and to contact their accountants as most of you know we are the last to hear!

Thanks (5)
Replying to chancewind:
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By Ammie
24th Aug 2022 10:26

Agreed.

In fact I would go a step further. HMRC and Land Registry will know when a property has been disposed of and in most cases even that its not a principle private residence, so that should initiate communication to flag up the requirement. If we are digitalising let's do it properly, not when it suits.

HMRC have no problem sending silly meaningless letters so perhaps they could send a meaningful one instead.

Thanks (1)
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By gazzo5000
24th Aug 2022 09:44

I've done quite a few late, where the client had no knowledge whatsoever of the new return needed.

I can only comment on my local area, but it seems in many cases the solicitors/ conveyancers are not advising the client of their need to file a return. One firm in particular sent a closing a letter basically saying here's your money. Please give us a thumbs up on Facebook or Instagram/ Twitter to say how wonderful we are. Not even the briefest bit of advice as to the submission of the necessary return to HMRC. How standards have decreased over the years.

Thanks (6)
Replying to gazzo5000:
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By Jimess
24th Aug 2022 12:35

I did a couple of returns for a joint ownership of a property where the solicitor wrote to them some 9 months after the completion date saying he was closing the files and he hoped they had completed and submitted the relevant CGT form that was due 30 days after the completion of the sale. Just in case they hadn't he pointed them to the relevant clause in the solicitors firm's terms and conditions that basically said they took no responsibility for CGT matters. My clients said it was never discussed with them at any time during the conveyancing process.

Thanks (1)
wolfy
By rob winder
24th Aug 2022 10:03

"The UK property reporting system is still not working properly, as tax agents are complaining that they get an error message such as: “We are experiencing technical difficulties, please try again in a few minutes."

Since when were agents able to file the return and how? Originally it had to be the client through their personal tax account or the agent using their personal tax account (which I wont). I'm obviously behind the times here if agents can now file.

Thanks (0)
Replying to rob winder:
Kitten
By Hazel Accounts
24th Aug 2022 11:02

Agents can file online via the "new" type of agent account (the same one as for MTD VAT).
I don't think it's a very nice system - the client still has to set up a CGT on property account first to get the reference number and then authorise you so if they're digitally challenged it's quite difficult.
Have filed a couple sucessfully online and have also filed on paper for a client who just couldn't face the convoluted route!

Thanks (0)
Replying to Hazel Accounts:
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By Geoff56
24th Aug 2022 11:36

I have done all of mine by paper, which has worked well. I have no intention of changing this approach.

Thanks (0)
Replying to Geoff56:
Morph
By kevinringer
24th Aug 2022 11:57

Until 2 weeks ago, all my 30/60-day CGT clients have been digitally excluded so I had been 100% paper PPDCGT too. 2 weeks ago I had my first digital-capable client make a disposal. They were able to initiate and authorise me. The online declaration takes less time than the paper PPDCGT, but only if the client is digitally-capable of doing the initial steps themselves. I have wasted far too many hours trying to talk digitally-challenged clients through the process. Why HMRC didn't make agents authorised by default is a mystery. After all, 100% of my CGT clients are in SA and I have authority in place. Contrast this with CJRS. We didn't have authority for CJRS but when HMRC launched CJRS, HMRC decided our existing PAYE authority was good enough for CJRS. So why didn't HMRC do this for CGT when in fact CGT is part of SA and we already have SA authority? I suspect HMRC didn't think of agents until too late. But then HMRC didn't put the regime in the PTA either.

Thanks (3)
Replying to rob winder:
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By Howard Walters
24th Aug 2022 12:33

You file via your ASA account. If you log in you can see there is a Tax Service listed as "Capital Gains on UK property". @Hazel Accounts mentions the client's part in the process and this is the main bugbear.
Yesterday I submitted a Property Return through my ASA for a Personal Representative in respect of her late Father's estate. Fortunately, with a bit of handholding, they managed to register themselves for a UK Property Account and it was all very slick after that.

Thanks (0)
Replying to Howard Walters:
wolfy
By rob winder
24th Aug 2022 14:07

Thanks for your help, I got there eventually. When I login by clicking the bookmarked page I can't see this link. When I googled "clients capital gains tax on property for agents" it lets me login using the same details but I get taken to a different page which shows this link you mention. Nothing is easy with these people.

Thanks (0)
Replying to Howard Walters:
wolfy
By rob winder
24th Aug 2022 14:07

Thanks for your help, I got there eventually. When I login by clicking the bookmarked page I can't see this link. When I googled "clients capital gains tax on property for agents" it lets me login using the same details but I get taken to a different page which shows this link you mention. Nothing is easy with these people.

Thanks (1)
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By TB93
24th Aug 2022 10:03

What a nice little earner HMRC have created for themselves.
Extra work for the accountants and/or individual, with no added value other than paying tax early, however with the bonus of implementing late filing penalties, HMRC are quids in so to speak.

Thanks (0)
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By TB93
24th Aug 2022 10:03

What a nice little earner HMRC have created for themselves.
Extra work for the accountants and/or individual, with no added value other than paying tax early, however with the bonus of implementing late filing penalties, HMRC are quids in so to speak.

Thanks (0)
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By Ammie
24th Aug 2022 10:19

I am not surprised, I would have expected the figure to have been worse.

Another poorly administered piece of tax legislation. There has been minimal targeted information to make affected parties aware. What does HMRC expect from professionals and the public? Read through the entire set of UK tax legislation regulations each day looking out for any changes that might effect them, just in case.

This will also be an issue with MTDfITSA. No good just digitalising everything and waiting for the penalties to be triggered. We need a common sense approach and help to fulfil our compliance obligations, even more so since HMRC seem to be drifting towards taxpayers dealing with more of their own affairs.

I would question the need for the reporting requirement anyway, even though its purpose is primarily to accelerate tax receipts, given the financial mess the country is in.

Thanks (2)
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By norstar
24th Aug 2022 10:25

It's not just CGT, but ATED too. At the end of the day, why are Solicitors not flagging these issues? It's not complicated and they are involved at the point of sale/purchase and should at least know about the existence of the returns required.

I've come across a few which now are subject to the daily penalties which HMRC of course, claim are fine to issue retrospectively. Looking likely we'll be going to Tribunal on one of these.

If the Solicitor (who routinely deals with ltd companies buying property) had just mentioned the existence of ATED, the client would have been fine. Same with CGT on disposals. I think it's negligent not to.

Thanks (2)
Replying to norstar:
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By Ammie
24th Aug 2022 10:28

Agreed.

That's another PITA piece of reporting.

Just stick it on the CT600 for goodness sake!

Thanks (0)
Morph
By kevinringer
24th Aug 2022 10:33

"As the late great tax expert Philip Hardman would have said – the UK property reporting service is a national disgrace!"

It is HMRC that is a national disgrace.

Thanks (3)
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By Software Seeker
24th Aug 2022 10:36

Didn't think daily penalties applied.

Thanks (0)
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By tedbuck
24th Aug 2022 10:56

Yet again we have taxation by penalties - in this case deliberately increased risk by obfuscation by HMRC.

Many solicitors were initially unaware of this system - did not HMRC think to tell them?

Sorry, that was silly, linking the words 'think' and 'HMRC'.

With all the penalties now arising there can be little doubt that HMRC realise they are incompetent at raising taxes correctly so are looking at a new income source. Think MTD for ITSA - you ain't seen nothing yet - and in that case it will be the people who cannot afford it who will have to pay. It's a wonder that the architects of the scheme can actually sleep at night - perhaps they sleep all day when they can do it at our cost!

I cannot ever recall being so disgusted at the gross incompetence of HMRC - it should be closed down and a working alternative replace it - and the people running it - paid by us - should be sacked without a golden handshake and a peerage. The taxpayer is footing the bill for this bunch of muppets, most of whom don't even understand the taxes they are administering.

Apologies for the rant but what else can one do?

Thanks (7)
Should Be Working ... not playing with the car
By should_be_working
24th Aug 2022 10:59

One would have to delve into the relevant red book but, like many here, I wonder how much of the additional revenue postulated for this measure was not just interest on early-paid tax, but the inevitable penalties.

Again we see that HMRC are no longer about seeing taxpayers 'pay the right amount of tax' but instead are focussed only on 'closing the tax gap'. If it were still the former then late SA returns, for example, would be dealt with by swift determinations rather than easy-to-administer automatic penalties.

Thanks (0)
Morph
By kevinringer
24th Aug 2022 11:03

26,500 were late, but what about those that have not filed at all? This regime has been in place for 2 years. Does HMRC consider 80% compliance after 2 years a success? There is still widespread lack of awareness of this regime. A solicitor approached me recently to deal with the Tax Return for an estate. The deceased's home had been sold during the period of administration. The estate only had one executor who happened to be another solicitor. Neither solicitor had any awareness of the 30/60-day CGT requirement, more than 2 years after the regime started.

Thanks (1)
Replying to kevinringer:
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By Carol Jefferis
25th Aug 2022 11:39

It would certainly be interesting to know how they got to 26,500 supposedly late for 2021/22. Given that most SA returns are filed close to the January deadline and very few by August how do they know about the ones where the oblivious taxpayer will only be declaring the gain on their not yet filed 2021/22 SA return?
Have HMRC taken into account the 2020/21 missed CGT returns picked up from the SA returns and assumed a similar fail rate for 2021/22.
Or are they only counting the ones where an actual 2021/22 late CGT return has arrived which would be pretty horrifying as there could be many thousands that have not arrived so not yet counted.

Thanks (0)
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By Homeworker
24th Aug 2022 11:17

I am not at all surprised. I have been trying to spread the word, in a small way, and haven't found any solicitors or Estate Agents yet who are telling vendors about this. Indeed I have a friend who asked me for advice, as he was vaguely aware that he needed to declare a gain (property owned jointly with his late father) but both his solicitor and Estate Agent had wrongly told him he didn't need to!

Thanks (2)
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By Pavilionaire
24th Aug 2022 12:14

HMRC should have pulled the plug on the CGT 30-day thing the moment we went into Covid lockdown. Dealing with this additional tax reporting burden whilst preparing furlough claims and answering client queries about SEISS grant, then post-Brexit changes, the introduction of MTD has really ramped the pressure up on accountants and tax agents. ENOUGH ALREADY! There is no additional labour to source to help with this extra work and - locally - I have seen many older accountants either retire or - in 3 cases - actually die whilst still in practice. Meanwhile, our professional bodies look on and do nothing.

Thanks (5)
Replying to Pavilionaire:
Morph
By kevinringer
24th Aug 2022 12:54

30-day CGT was launched just days into the UK's first ever national lockdown. HMRC were told that we would not be able to sit with clients and hold their hands through the registration/authorisation process but the HMRC steam roller was not for listening. HMRC assured us all that they had piloted the system adequately but like everything else, HMRC had completely failed to engage with the digitally-challenged, or indeed, just normal people because lets face it, who in their right mind would voluntarily sign up for a HMRC pilot? What is in it for them? The shambles that has happened ever since then is the result of HMRC failing to pilot adequately. This is not something confined to 30-day CGT. Look at the new VAT Registration Service launched just a couple of weeks ago. HMRC will make it a hat trick when MTD ITSA starts.

Thanks (3)
Replying to kevinringer:
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By Pavilionaire
24th Aug 2022 13:36

I have this week received an enquiry from a prospective client about quoting for undertaking a CGT Computation re the disposal of a property that completed yesterday - so the 60-day clock is already ticking - that is 1/4 owned by his wife, 1/4 his sister-in-law, 1/2 by the parents, no information as yet about consideration, main residence relief, other income for the individuals concerned. Given the fact I'm busy, there could be penalties and interest if late, I have no agent status, I don't know these people and am expected to do Anti-Money Laundering checks it is getting to the point it is just not worth taking this sort of work on commercially, AND YET who else can do this work to help these people?

Thanks (5)
Replying to Pavilionaire:
Morph
By kevinringer
24th Aug 2022 13:58

So that's 4 individuals who will need to be engaged and AML processes completed even before you start the work. Your fee would need to recover this bearing in mind it's a one-off. That's likely to add a couple of hundred to the fee before you start work. When preparing the CGT for a client we know, we've got a good idea how efficient the client will be at supplying information and whether we might already have some of that on file already. But for a new client it's difficult to judge. Until you start asking questions you don't know what might be involved and until you know what is involved you can't estimate time. So we end up having to round up to cover all eventualities.

As to who else can do this work, I suspect HMRC envisaged everyone would be able to do their own without agent involvement. But this (like so much of tax) is complex and the online reporting process isn't intelligent enough to ask the right questions and generate the right calculation.

Thanks (4)
Replying to Pavilionaire:
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By Carol Jefferis
25th Aug 2022 11:55

I know my response to this fee enquiry would be 'thanks but no thanks' unless they were also bringing continuing good quality work. Really not worth the grief otherwise even if you aren't dealing with combinations of main residence relief. There will be practitioners out there who are happy to do this type of work at an appropriate cost but I suspect it might be best suited to an tax enquiry specialist who doesn't get out of bed for less than £5K up front.
At least if the CGT requirement was better publicised taxpayers could start lining up an accountant when the property first went on the market and get all their numbers lined up in advance.

Thanks (0)
Replying to Carol Jefferis:
Morph
By kevinringer
25th Aug 2022 12:36

All my 30/60-day CGT cases have been existing clients. If I had an enquiry from someone who was not an existing client and only requires the 30/60-day CGT, I reckon I'd need to quote them £500 to cover all costs and eventualities.

Thanks (0)
Replying to kevinringer:
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By Carol Jefferis
26th Aug 2022 14:05

£500 each I hope? So £2K starters for the family of 4?

Thanks (1)
Replying to Carol Jefferis:
Morph
By kevinringer
26th Aug 2022 15:00

Exactly

Thanks (0)
Replying to Pavilionaire:
Morph
By kevinringer
24th Aug 2022 12:57

As for the PBs, I know they did tell HMRC of many shortcomings in their 30-day systems about a year before it went live. But HMRC did what it always does and stuck its fingers in its ears and ignored what the PBs said. It's a bit like the ASA: HMRC ignored all the feedback before it went live and look at how rubbish the ASA is compared to the old GG account, but (very) slowly since then, HMRC has had to introduce the features that should have been there from the outset. I don't understand how HMRC could launch SA online 25 years ago and it worked straight out of the box, but today HMRC can't get anything right first time and it takes years (and expense) for HMRC to fix the problems that anyone with tax experience could spot. It's as if the people in HMRC who set the specs for these systems know nothing about tax.

Thanks (8)

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