- Original Poster
- #1
I have received a letter from my local MP, Esher McVey as a result of my letter sent to her, as detailed here:
http://www.cheapaccounting.co.uk/blog/?p=956
The full letter can be read at:
http://www.cheapaccounting.co.uk/mcvey.pdf
She makes some interesting points
There is a PAYE reconciliation process ever year
If this were the case then surely HMRC would pick up errors that arose prior to the two years for which HMRC have issued underpayment notices. We have several cases where underpayments date back to years prior to 2008 / 2009.
So it is evident that reconciliations, manual or otherwise, could not have occurred for all PAYE tax payers prior to 2008 / 2009.
No (PAYE) reconciliation was undertaken last year
So if this is the case then the HMRC exceptional circumstances rules MUST apply in all cases.
To remind you of the HMRC rules:
Exceptional Circumstances
In exceptional circumstances, arrears notified less than 12 months after the end of the relevant tax year may be considered (for write off) where both of the following apply:
·HMRC failed more than once to make proper use of information received about a source of income
·HMRC allowed tax arrears to build up over two whole tax years
So by not performing the reconciliation for the tax year 2008 / 2009 surely Esher has confirmed that HMRC have allowed the arrears to build up over 2 whole tax years being 2008 / 2009 and 2009 / 2010.
So in these exceptions circumstances the arrears for 2008 / 2009 and 2009 /2010 can be considered for write off.
That is great news!
So how can HMRC ignore the application of the exception circumstances when they did not perform their annual reconciliation?
£billion is owed In light of the fact that the country faces the biggest deficit in peacetime history Ministers have made it clear that the treasury cannot afford to write off the underpayments
Well were to start on this statement!
·Why wasnt the £2 billion collected at the time?
·If HMRC is incapable of collecting tax in a timely manner then installed a department who can!
·The innocent tax payer cannot be punished because the country has a huge deficit
·Is this a statement of collect the money come what may?
·The financial position of the country cannot be used as an excuse to collect tax that should have been collected years before now!
If I said to my clients I have billed you incorrectly since 2008 and I now want more money I am very sure that I would be told exactly what they intended to do! Not pay me!
In certain other cases HMRC will consider writing off all underpayments if it can be shown that HMRC was provided with all the information necessary
This statement makes no sense!
In certain other cases no!
It applies to all cases.
Why?
Well HMRC must have been provided with the information in order for them to calculate a tax underpayment!
How else have they arrived at the tax due amounts.
It is from the information that they already have and havent used in their reconciliations.
Reconciliations that they havent undertaken previously and have now only undertaken for 2008 / 2009 and 2009 / 2010 because they have a shiny new computer system.
The tax payer fault.
No!
HMRCs fault yes.
So OK they didnt have a system to do the reconciliation before. But is that he tax payers problem or is Esher saying we all have to pay towards this deficit regardless of the circumstances.
If this is the case then we had all better watch out to see what we have to pay next towards the deficit.
Writing off Ministers have indicated though, that this is not likely to apply in the majority of cases.
I would like the question answers how do Ministers know?
How many cases will a write off be apply to?
Or as indicated above, are the underpayments being chased come what may because the deficit has to be reduced.
Has an analysis of the underpayment cases been carried out to assess how they have arisen?
If not, why not?
Unless the analysis is available then how can Ministers make such a comment?
Is this just wishful thinking on their behalf?
So to conclude ..
Thank you Ms McVey for the letter.
Interesting but leaves a lots of questions unanswered.
Maybe one of the Ministers referred to in your letter would actually like to comment on the above points and clarify the exact position.
http://www.cheapaccounting.co.uk/blog/?p=956
The full letter can be read at:
http://www.cheapaccounting.co.uk/mcvey.pdf
She makes some interesting points
There is a PAYE reconciliation process ever year
If this were the case then surely HMRC would pick up errors that arose prior to the two years for which HMRC have issued underpayment notices. We have several cases where underpayments date back to years prior to 2008 / 2009.
So it is evident that reconciliations, manual or otherwise, could not have occurred for all PAYE tax payers prior to 2008 / 2009.
No (PAYE) reconciliation was undertaken last year
So if this is the case then the HMRC exceptional circumstances rules MUST apply in all cases.
To remind you of the HMRC rules:
Exceptional Circumstances
In exceptional circumstances, arrears notified less than 12 months after the end of the relevant tax year may be considered (for write off) where both of the following apply:
·HMRC failed more than once to make proper use of information received about a source of income
·HMRC allowed tax arrears to build up over two whole tax years
So by not performing the reconciliation for the tax year 2008 / 2009 surely Esher has confirmed that HMRC have allowed the arrears to build up over 2 whole tax years being 2008 / 2009 and 2009 / 2010.
So in these exceptions circumstances the arrears for 2008 / 2009 and 2009 /2010 can be considered for write off.
That is great news!
So how can HMRC ignore the application of the exception circumstances when they did not perform their annual reconciliation?
£billion is owed In light of the fact that the country faces the biggest deficit in peacetime history Ministers have made it clear that the treasury cannot afford to write off the underpayments
Well were to start on this statement!
·Why wasnt the £2 billion collected at the time?
·If HMRC is incapable of collecting tax in a timely manner then installed a department who can!
·The innocent tax payer cannot be punished because the country has a huge deficit
·Is this a statement of collect the money come what may?
·The financial position of the country cannot be used as an excuse to collect tax that should have been collected years before now!
If I said to my clients I have billed you incorrectly since 2008 and I now want more money I am very sure that I would be told exactly what they intended to do! Not pay me!
In certain other cases HMRC will consider writing off all underpayments if it can be shown that HMRC was provided with all the information necessary
This statement makes no sense!
In certain other cases no!
It applies to all cases.
Why?
Well HMRC must have been provided with the information in order for them to calculate a tax underpayment!
How else have they arrived at the tax due amounts.
It is from the information that they already have and havent used in their reconciliations.
Reconciliations that they havent undertaken previously and have now only undertaken for 2008 / 2009 and 2009 / 2010 because they have a shiny new computer system.
The tax payer fault.
No!
HMRCs fault yes.
So OK they didnt have a system to do the reconciliation before. But is that he tax payers problem or is Esher saying we all have to pay towards this deficit regardless of the circumstances.
If this is the case then we had all better watch out to see what we have to pay next towards the deficit.
Writing off Ministers have indicated though, that this is not likely to apply in the majority of cases.
I would like the question answers how do Ministers know?
How many cases will a write off be apply to?
Or as indicated above, are the underpayments being chased come what may because the deficit has to be reduced.
Has an analysis of the underpayment cases been carried out to assess how they have arisen?
If not, why not?
Unless the analysis is available then how can Ministers make such a comment?
Is this just wishful thinking on their behalf?
So to conclude ..
Thank you Ms McVey for the letter.
Interesting but leaves a lots of questions unanswered.
Maybe one of the Ministers referred to in your letter would actually like to comment on the above points and clarify the exact position.
