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It pays to challenge HMRC!

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flanajb

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Most of you will have heard that HMRC recently switched on their new IT system and then reconcilled the tax accounts for millions of us PAYE employees.

Well I received an underpayment demand of £430 for the tax year 2006/2007. Having contacted my old employer I was told that HMRC were notified via a year end P11D of the share option payment in 2006.

After doing some digging around I found out that under a HMRC ESC 19A ruling, HMRC can only demand an underpayment if the event was in the last 12 months and HMRC had all of the information at the time to have issued the underpayment nearer the time of the event.

I wrote to HMRC stating the ESC 19A ruling, and was very pleased when I opened a letter yesterday telling me that as they had not pursued the matter within 12 months of being presented with the P11D that they had no right to request payment and will write the amount off.

Now this made me rather angry, as I thought to myself "how many poor souls out there will not know this and just roll over and pay the amount". HMRC should not legally be allowed to demand monies that fall outside of their time window. Any private enterprise would have the correpsonding ombudsman knocking on their door if they adopted a similar practice.
 

hanser

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Not so sure its as black and white as you describe

HMRC have an obligation to collect tax, hence the demand. Under certain circumstances the tax payer can make a claim under ESC19 and ask for the amount to be waived. The Revenue then consider the claim and give a yes or no. So they've correctly applied due process, you have likewise and there's a sensible outcome.
 

RogerBoyle

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hanser":2ypa0vp2 said:
Not so sure its as black and white as you describe

HMRC have an obligation to collect tax, hence the demand. Under certain circumstances the tax payer can make a claim under ESC19 and ask for the amount to be waived. The Revenue then consider the claim and give a yes or no. So they've correctly applied due process, you have likewise and there's a sensible outcome.
Weeeeelllllll to play devils advocate yes it is as simple as that
The same people that will look at chasing the outstanding debts/Bills (whatever you want to call them )will be well aware of the legal rules and time frames for recovering monies owed..

(so by sending out those demands they are breaking due process)

They will have been instructed (by the policy makers)to send out the demands regardless of the time frames involved
as they(the policy makers) will be well aware that some will challenge the demand but most will just pay it

At the end of the financial year the extra monies can and will be used to offset any monies still awaiting to be recovered

the cynic in me says its easier to get monies from your average tax payer than it is from big business and high earners
Hence the reason the demands go out

Roger

edited for spelling
 

flanajb

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Totally agree with Roger on this. HMRC know damn well that the demand they are sending out falls outside of the permitted time frame for them legally recouping the underpayment, but rely on the fact that the majority of tax payers will not have the inclination to do the research to find out whether the underpayment charge legally has to be paid.

If any private enterprise used such tactics they would have the relevant ombudsman knocking on their door in no time!

HMRC are a law unto themselves and their practices need to be reviewed.
 

cambournepete

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flanajb":1bbqsgtj said:
.. whether the underpayment charge legally has to be paid..
Playing another devil's advocate and passing absolutely no judgements here, because I don't know how I'd react...

Isn't there a moral obligation to pay due tax, even if it's not a legal obligation?

BTW, I was trapped years ago for not completing tax returns they hadnt even sent me... :twisted:
 

hanser

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A couple of things

I'm not aware of any time limitation on debts owing to the Crown which includes Income Tax, hence the demand. You've used the ESC19 claim and the tax has been waived. Process is spot.

and, just being devils advocate......

In similar circumstance but different scale let's say the tax payer is Fred Goodwin and he owed £250k to the taxman which was not collected from 2006/07 tax tears due to some *ock up in his tax office. Would you be happy for the Revenue to automatically let him off paying £250k of tax?
 

flanajb

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hanser":2tbas6pg said:
In similar circumstance but different scale let's say the tax payer is Fred Goodwin and he owed £250k to the taxman which was not collected from 2006/07 tax tears due to some *ock up in his tax office. Would you be happy for the Revenue to automatically let him off paying £250k of tax?
Why have you chosen to use Fred Goodwin as an example?

In answer to your question, it would not bother me in the slightest if they let him off 250k because they had cocked up their calculations. PAYE should be just that. You pay tax as you earn, with an adjustment at the end of the tax year for items on the end of year P11D. If the tax office can't do their sums correctly then that is their problem. Asking for tax due some 4/5 years later does ask the question "What is the point of PAYE if they keep getting it wrong even though they have all of the information". They may as well scrap PAYE and put everyone onto Self Assesment
 

RogerBoyle

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hanser":24igej3h said:
A couple of things

I'm not aware of any time limitation on debts owing to the Crown which includes Income Tax, hence the demand. You've used the ESC19 claim and the tax has been waived. Process is spot.

and, just being devils advocate......

In similar circumstance but different scale let's say the tax payer is Fred Goodwin and he owed £250k to the taxman which was not collected from 2006/07 tax tears due to some *ock up in his tax office. Would you be happy for the Revenue to automatically let him off paying £250k of tax?
:mrgreen: the ESC19 that you mention states the time constraints so there should have been no demand made

As for the Fred Goodwin example then No i wouldnt be happy about it but the rules are the same for everybody are they not ?????
But it does make you wonder how much some of the higher earners with " creative book keeping" have or will have gotten away with ????

Roger
 

Digit

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Over the years I have challenged the inland revenue, twice, the Trading Standards twice, the HSE once, the DVLA once, a solicitor once, HP companies twice and the local constabulary once.
The most scary thing about such challeges is how little the other person seems to know! They seem to issue paperwork without the slightest concerns for accuracy or even legality.
BTW, I won every challenge, so it does pay to check!

Roy.
 

MikeH

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I don't normally comment on these things but feel I should add my two pennies worth here. In defence of Flanajab if I understand it correctly he is an employee earning (probably) a standardish wage. In these circumstances you assume that your employer/IR will correctly take the right money and you will get to the end of the year not owing hundreds you can't afford. It's a bit of a blow to the finances to suddenly be asked for what are large sums of money that you probably cannot afford. Difference against Petes' point is that
1. Fred could afford it
2. Fred probably would know at the time that he is quarter of a million up and did nothing about it
3. Fred is probably actively employing people to avoid paying what he owes

Do any of the above points apply to flanajab? Possibly I suppose as I don;t know him but I suspect that they don't.

I don't agree with anyone deliberately avoiding paying their dues or actively seeking to avoid them, but in this case I agree with what Flanajab has done and with his POV.
 

Losos

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Digit":nnyqzot3 said:
Over the years I have challenged the inland revenue, twice, the Trading Standards twice, the HSE once, the DVLA once, a solicitor once, HP companies twice and the local constabulary once.
The most scary thing about such challeges is how little the other person seems to know! They seem to issue paperwork without the slightest concerns for accuracy or even legality.
BTW, I won every challenge, so it does pay to check!

Roy.
Wot, even the one to the solicitor :?: I'm impressed :lol: :lol: :lol:
 

Digit

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Yep! People get so used to issuing the same forms that it become automatic, plus officials have come to expect us to accept whatever they tell us and just pay up.

Roy.
 

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