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Pension communation leads to unexpected tax liability
iStock_Pension_Andrii Yalanskyi

Taxpayer relied on pre-populated tax return figures


Nicholas Scoggins believed HMRC had all the pension and P11D details it needed, as other employment figures were pre-populated on his tax return. 

9th Nov 2021
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The case of Scoggins vs HMRC (TC08128) goes back to the 2015/16 tax year, when the taxpayer received several pension commutations. This meant he received a lump sum in exchange for forgoing part of his ongoing annual private pensions.

Each of his pension schemes sent him a P45 form and a covering letter stating that the tax they had deducted may not be correct once other income was taken into consideration. Scoggins was therefore encouraged to consider his overall tax position and let HMRC know if he needed to submit a return.

Scoggins did indeed later submit a 2015/16 self-assessment tax return showing (pre-populated) employment income, but did not include the pension figures, nor the figures from his P11D.

Scoggins spoke to the HMRC call centre regarding his return and paid over the £1,007.00 he was told was due. He subsequently submitted an amended 2015/16 return to claim additional travel costs.

Scoggins later submitted a 2016/17 return, but this time the pension figures were pre-populated, due to an update to HMRC’s systems.

A discovery

In March 2018 HMRC noted that the 2015/16 return did not include the figures it had received from the pension providers, nor those amounts shown on the P11D for the year. As this was outside the standard 12 month enquiry window, HMRC relied on the fact it had ‘discovered’ the omissions and so could extend the enquiry window to four years.

An enquiry was also opened into the travel and subsistence claim.

Following a couple of false starts by HMRC where they used incorrect amounts, a letter was issued to Scoggins advising of additional tax for 2015/16 of £6,398.32, being £2,464.40 from the travel claim and £3,933.92 from the pensions and P11D omissions.

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Replies (5)

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By Paul Crowley
09th Nov 2021 19:39

HMRC being very generous in considering this just an error, not careless.
The taxpayer ammended a tax return to claim travel expenses, but got that wrong by £2464 of tax liability.
But in that ammendment he did not notice the missing income and benefits?

Thanks (0)
Replying to Paul Crowley:
By lh3f9764bg1g
10th Nov 2021 10:23

I agree but at the same time . . . . . pre-population is a joke.

Thanks (0)
By petestar1969
10th Nov 2021 10:22

Adjusted headline for the article - "Taxpayer is an idiot."

Thanks (0)
Replying to petestar1969:
By Moo
10th Nov 2021 12:03

'My client is an idiot' is my standard excuse when making a voluntary disclosure for a client.
I find it generally gets a sympathetic response from tax person.
So far it has usually been true, not sure what I would say if the client was a cheating little weasel.

Thanks (1)
Replying to Moo:
By tcatt31489
11th Nov 2021 23:03

Even better than 'My client is an idiot' is 'My client cannot read and write' Tax Inspector was speachless when I gave this as the reason why my client's records were less than adequate. Enquiry was fairly quickly closed. A surprising number of self-employed people are illiterate. I always assumed this was because they could not complete job applications!

Thanks (0)