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HMRC in a forgiving mood.....

Practical Issues
yorkshirelad1
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HMRC in a forgiving mood.....

#244421

Postby yorkshirelad1 » August 15th, 2019, 9:23 am

From sharecast
https://www.sharecast.com/news/press-round-up-short-premium/thursday-newspaper-round-up-british-steel-monzo-digital-tax--6940050.html
(as the source is The Times and the Times has a paywall)

About 120,000 businesses that missed a tax deadline will escape a fine after HM Revenue & Customs said that it would show leniency before a possible no-deal Brexit. The tax authority could have issued cumulative fines running into tens of millions of pounds after one in four companies failed to comply with new online filing rules in time. Officials said that they would not levy penalties because businesses may be “fully focused” on leaving the European Union on October 31. – The Times


I wonder if HMRC would forgive me if I'd have forgotten to pay my tax on 31 July because I was fully focused on Brexit.... Somehow I doubt it. Smacks of another cosy deal.
More thoughtfully, if HMRC is so focused in ensure everyone pays their tax due, it's exceedingly generous when it wants to be...
Sounds like businesses let off the hook and HMRC let off the hook (haven't got enough staff to chase the late-payers off, me thinks?)

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Re: HMRC in a forgiving mood.....

#244451

Postby Gan020 » August 15th, 2019, 10:41 am

HMRC never fail to astonish me. I suggest they are under-resourced at the moment and can't persue the 120,000.

I have 4 tax reclaims in at the the moment for my family. 5 years ago these would have been processed and paid within a month.

The oldest one was submitted on 23/4 and when I chased 10 days ago they told me it was in a queue with everyone else's and it was due to be looked at on 13/08. Once it's processed they say they will pay within 60 days although if last year is anything to go by I had to phone to ask for an intervention to even get it paid in that time.

I find it absolutely incredible that HMRC think 6 months is an appropriate timeframe to process and pay a tax reclaim.

yorkshirelad1
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Re: HMRC in a forgiving mood.....

#244703

Postby yorkshirelad1 » August 16th, 2019, 10:01 am

Gan020 wrote:HMRC never fail to astonish me. I suggest they are under-resourced at the moment and can't persue the 120,000.

I have 4 tax reclaims in at the the moment for my family. 5 years ago these would have been processed and paid within a month.

The oldest one was submitted on 23/4 and when I chased 10 days ago they told me it was in a queue with everyone else's and it was due to be looked at on 13/08. Once it's processed they say they will pay within 60 days although if last year is anything to go by I had to phone to ask for an intervention to even get it paid in that time.

I find it absolutely incredible that HMRC think 6 months is an appropriate timeframe to process and pay a tax reclaim.


There's a similar theme at the probate office: there was an article on the Torygraph (sorry, it's paywalled, I read the paper edition) a couple of weeks ago suggesting that there are some delays in the probate office at the mo.
https://www.telegraph.co.uk/tax/inheritance/one-five-face-higher-inheritance-tax-bills-probate-delays-drag/

Trying to get any sort of response out of NS&I is taking much longer than usual.

I get the feeling that absolutely any civil servant that can be made available at all is being seconded to Brexit duties.

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Re: HMRC in a forgiving mood.....

#244881

Postby AF62 » August 16th, 2019, 7:22 pm

About 120,000 businesses that missed a tax deadline will escape a fine after HM Revenue & Customs said that it would show leniency before a possible no-deal Brexit. The tax authority could have issued cumulative fines running into tens of millions of pounds after one in four companies failed to comply with new online filing rules in time. Officials said that they would not levy penalties because businesses may be “fully focused” on leaving the European Union on October 31. – The Times


That only touches on part of the story. It wasn't primarily a forgiveness due to Brexit but that a new process for filing VAT returns had been introduced and HMRC knew that many businesses would screw it up (and they were not wrong, 120,000 did). What made it worse was this fell around the same time as the UK should have left the EU. Anyway, easier for HMRC to go with a 'softly softly' approach and an instruction to get it right next time than end up with thousands of appeals to deal with. After all what they want is people to be actually submitting their returns through the new process than wacking people with fines.

Gan020 wrote:HMRC never fail to astonish me. I suggest they are under-resourced at the moment and can't persue the 120,000.


They could easily pursue the 120,000 - not even a click of the button as it is all automated; they just turned the penalty system off.

As for the suggestion they are under-resourced - given their funding is shrinking by 5% a year, every year, like all government departments, this is part of what is driving the Making Tax Digital programme; removing people from the process. I wouldn't hold your breath for it to get better.

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Re: HMRC in a forgiving mood.....

#245964

Postby Gan020 » August 21st, 2019, 10:26 am

I've finally got the first of my tax calculations back from HMRC yesterday.

I had to do my tax reclaim by paper as I have interest on corporate bonds which goes on the other income page.

Suffice to say although I put in the notes the amount of tax overpaid with a calculation HMRC have ignored it and not even bothered to put my other income into the tax calculation.

They end up with the same tax owed as me as it made no difference to the calculation so I'll just move on.

However, I did read this: "please note any repayment is based on figures in our tax return, before it has been checked. So, our payment is not confirmation that your return is complete and correct"

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Re: HMRC in a forgiving mood.....

#245993

Postby Alaric » August 21st, 2019, 12:11 pm

By contrast to the thread title the Daily Mail has a piece where the opposite seems to apply.
https://www.dailymail.co.uk/money/taxbe ... phole.html

That's HMRC taking action against those who used schemes where they "borrowed" their remuneration on an interest free and non-repayable basis.

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Re: HMRC in a forgiving mood.....

#246076

Postby Gan020 » August 21st, 2019, 3:38 pm

Alaric wrote:By contrast to the thread title the Daily Mail has a piece where the opposite seems to apply.
https://www.dailymail.co.uk/money/taxbe ... phole.html

That's HMRC taking action against those who used schemes where they "borrowed" their remuneration on an interest free and non-repayable basis.


I am really struggling with the Daily Mail article. For 10 years I was a consultant/contractor and I was very well aware of the variety of the schemes available which grew in agressiveness over time offering more and more income almost tax free. When I started the going rate appeared to be that you would get about 85% tax free moving to about 98% for the most aggressive schemes when I finished contracting. It was plainly obvious to me that no matter what you were promised HMRC was not going to let people invoicing sometimes in excess of 150k a year pay keep £148k of it. It was also plain to my peers but many of them chose to use the schemes. There seemed to be alot of "everyone is doing it", "if HMRC objected these schemes wouldn't be offered", "how are HMRC going to catch up with me", "people earning far more than me think the scheme is OK", "it's being offered by a payroll company so it must be ok" and so on. I met plenty of contractors who would openly boasted about how little tax they were paying, many of whom spent it on a lifestyle they could not otherwise afforded.

I needed to sleep at night so I paid myself through PAYE and paid the same rates of tax and NI as an employee. Some of my peers told me I was a fool. What was most frustrating was that often contractors taking home 90% of their pay would undercut my daily rate.

So, I'm really struggling with those who now feel aggreived that HMRC are chasing them. Surely they must have understood that schemes ran through a third party which often involved loans to the employee in perpetuity or schemes involving invoicing through off-shore companies carried some level of risk HMRC would not be happy. There were many others involving disguised employment.

I suppose I have some sympathy with the age of some of the debt HMRC are chasing. If it takes more than seven years for HMRC to catch up with people then perhaps there should be some deal available. I suspect there probably is on a case by case bais if you have the ability to pay. I also have some sympathy that there will be a group of people who are not financially well educated, possibly not earning large sums who took these schemes on trust (because as the years went by they got offered not only to those invoicing large amounts but also to nurses, social workers etc.)

But we can't have a society where some people pay almost no tax and therefore contribute almost nothing to society but still use all the services that the rest of the tax payers contribute to. That's just wrong. There has to be some penalty.

We are back to "if it's too good to be true, it probably is", but how do we move to a society where someone (government) steps in sooner. After all, these schemes ran for 20 years or so and the government has some responsibility too. I could argue with myself over that one. HMRC started publishing IR35 guidance perhaps as long as a decade ago. Certainly I became concerned about in around 2011, thus paying myself through PAYE. I know most contractors just ignored it as it would mean they were worse off. Gradually some took it on board, mostly those who used an accountant to do their tax but when you are asking people to move from paying 2% tax to a marginal rate above 50% there would always have been some that stuck their heads in the sand and carried on regardless.

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Re: HMRC in a forgiving mood.....

#246225

Postby yorkshirelad1 » August 22nd, 2019, 9:53 am

Gan020 wrote:
Alaric wrote:By contrast to the thread title the Daily Mail has a piece where the opposite seems to apply.
https://www.dailymail.co.uk/money/taxbe ... phole.html

That's HMRC taking action against those who used schemes where they "borrowed" their remuneration on an interest free and non-repayable basis.


I am really struggling with the Daily Mail article. For 10 years I was a consultant/contractor and I was very well aware of the variety of the schemes available which grew in agressiveness over time offering more and more income almost tax free. When I started the going rate appeared to be that you would get about 85% tax free moving to about 98% for the most aggressive schemes when I finished contracting. It was plainly obvious to me that no matter what you were promised HMRC was not going to let people invoicing sometimes in excess of 150k a year pay keep £148k of it. It was also plain to my peers but many of them chose to use the schemes. There seemed to be alot of "everyone is doing it", "if HMRC objected these schemes wouldn't be offered", "how are HMRC going to catch up with me", "people earning far more than me think the scheme is OK", "it's being offered by a payroll company so it must be ok" and so on. I met plenty of contractors who would openly boasted about how little tax they were paying, many of whom spent it on a lifestyle they could not otherwise afforded.

I needed to sleep at night so I paid myself through PAYE and paid the same rates of tax and NI as an employee. Some of my peers told me I was a fool. What was most frustrating was that often contractors taking home 90% of their pay would undercut my daily rate.

[snip]



+1
esp the "if it sounds too good to be true, then it probably is", but then I'm old school and like to sleep at night and generally avoid attracting attention when it comes to tax returns etc. As every skoolboy (sic) knows, rules/boundaries are there to be broken/pushed, just don't get caught, and if you do, take it on the chin, notwithstanding the para noting that large groups such as nurses may possibly have been pulled into the schemes unwittingly and be financially less well educated, and the debts may be several years old. Ironically, I've never been able to reconcile the notion that healthcare sector/professionals are always aiming for more money whilst some of their number are involved in such schemes as described above which deprives the exchequer of tax revenue....


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