check of tax return but has taxman missed deadline

by **2taxmc** on Sat Mar 27, 2010 7:16 pm

Received a ‘Check of self assessment tax return for tax year ended 5 April 2008.’ It relates to ‘Taxed bank and building society interest.’
The difference between my figure and theirs is about £800. Did discover I had made some mistakes. One in particular. I thought one account was a joint one with my wife, but when I checked it was in my name alone, and has always been. I thought that when I changed a linked account to a joint one, that this linked one would have automatically become a joint one too. But no, and I never noticed. If I take that into account then the difference drops to about £90 which is about 1% of the total.
However, I found a book in the library which says that the tax man had to enquire by 31 January 2010, if I have read and understood correctly, and so he ‘has lost the right to enquire into your tax return for that year.’ (I had handed my tax return in to a London tax office on 31 October 2008). So should I tell him, very politely of course, that he had not kept to the deadline and so I could ignore his letter, or is that likely to make him determined to get me some other way. Any advice please.

by **mullet** on Sat Mar 27, 2010 7:31 pm

So should I tell him, very politely of course, that he had not kept to the deadline and so I could ignore his letter, or is that likely to make him determined to get me some other way. Any advice please.

Yes, it appears that he has missed the deadline. You could tell them where to go, but since there is a definite underpayment of income tax HMRC has other options.

They could issue an assessment for 2007-08 on the basis that they have discovered that income which ought to have been assessed has not been assessed or that your self assessment was insufficient. There is a protective measure for you, i.e. was the information "made available" in your tax return? TBH, unless you wrote in the white space that you had declared only 50% of the interest from a sole account then the information was not made available. In any case, HMRC may well be able to argue that you were negligent in completing your return - in which case "made available" does not need to be considered.

A couple of definitions:
Discover - find out, reach an honest conclusion, become aware of etc.
Neglect - not taking care, not doing something that a reasonable man would do, not carefully reading the relevant notes, not including all sources of income etc.

You could wing it and see how far they take it, but it may indeed make them more determined. What is the date of their initial letter, and when did you receive it?

by **2taxmc** on Sun Mar 28, 2010 1:19 am

What is the date of their initial letter, and when did you receive it?

It is dated 9 March 2010 and I received it on 17 March.

by **mullet** on Sun Mar 28, 2010 5:52 pm

It is unusual for HMRC to be so far out. They may be under the impression that your tax return was received late, thereby giving them until 30 April 2010 to open an enquiry.

One way that this can happen is by it not having been recorded as received on 31-10-2008. London tax offices don't process tax returns - that generally happens in the "factory" offices in Wales, Scotland, Merseyside, Tyneside etc. If it remained in a pile (plenty of them!) of stuff awaiting processing, it is possible that they did not "capture" the return until after 31-01-2009.

Sorry, another question. Please look at your self assessment statements and tell me the date on which the line "balancing payment 2007-08" appeared. That will be the date of "capture".

Everything else I said still stands - on the basis of your information they are late but they have other options.

by **2taxmc** on Sun Mar 28, 2010 11:36 pm

Please look at your self assessment statements and tell me the date on which the line "balancing payment 2007-08" appeared. That will be the date of "capture".

The date is 31 Jan 2009. Naive question. What is the point of having this date, after which the taxman loses the right to check, if the advice is not to use it to say that your (taxman) enquiry is too late?

by **mullet** on Mon Mar 29, 2010 6:14 pm

The date is 31 Jan 2009.

That is the due date of the charge. What I need to know is the date that it first appeared on the statement. Does it show?

If there is no other date against that line then we'll need to do a bit of guesswork. What is the date of the statement on which the 2007-08 balancing payment appeared for the first time? And what is the date of the statement immediately preceding that one?

by **wamstax** on Fri Apr 02, 2010 8:13 pm

OK so you made a mistake.... what do you intend to do about it?

If you choose to take no action then you could be "guilty" of negligence in that you have become aware of a mistake in your tax return but there is a delay in you correcting the mistake.

It would also be open to him to just raise an assessment to recover the unpaid tax - assuming that you are liable to higher rates tax and therefore that there is unpaid tax -
The previous answer regarding discovery is seconded in that you would be entitled to question whether the information was available to HMRC prior to the expiry of the enquiry window and therefore there was no discovery outside the window enabling them to open the enquiry. Unless HMRC are looking to use the mistake to open up an all encompassing FULL enquiry into all your tax liabilities the most commercially viable avenue would be to just volunteer the information regarding your mistake and get matters resolved at the earliest possible date. You could always couch your correspondence in such a way that you have noticed a mistake that was innocently done - but get ready to argue when they don't immediately accept that there was no negligence - and you would wish to bring this to their attention so that they can assess the interest appropriately. If however they are intending to use the mistake to open up a FULL enquiry I would recommend that you engage the services of an experienced tax investigation adviser to at least review everythign to see the best way forward

by **2taxmc** on Mon Apr 05, 2010 12:01 am

Thank you for your comments. Apologies for slowness in replying – my brain seems to be working slower since I got the letter from the taxman.Re the question:
'That is the due date of the charge. What I need to know is the date that it first appeared on the statement. Does it show?

If there is no other date against that line then we'll need to do a bit of guesswork. What is the date of the statement on which the 2007-08 balancing payment appeared for the first time? And what is the date of the statement immediately preceding that one?'

All I can find is the Self assessment statement dated 11 March 2009 where the 'balancing payment due for year 07/08 is shown with date 31 Jan 09.'

Sine I now need to respond, a few further questions:

1 Should I point out the fact that the HMRC letter did not come within the time limit, or should I just ignore this

2 Can I just agree that the taxman’s figure is correct, say the major reason is that I had assumed the account was a joint one and so I had missed about £800, and leave it at that (together with the figures for each of my accounts). Or can I just agree the figure but provide no explanation at all?

3 Since it looks as though I should pay an extra £200 (approx) for extra 20 % tax, should I immediately send a cheque for this amount on account.

4 Since the same mistakes apply to 2009- 2010 tax return should I say this now and send another £200 cheque for that, start to work on the interest amounts, or should I wait?

by **mullet** on Mon Apr 05, 2010 8:33 am

1 Should I point out the fact that the HMRC letter did not come within the time limit, or should I just ignore this? I am a bit of a pedant, so I think they need to be told that they got it wrong. At the moment they have no legal basis for an enquiry, and would have to issue an assessment to recover the tax. I'm not telling you to make them sweat or anything, but if there is a maverick on the loose he/she needs to be told what is wrong. But I suspect it is a mistake caused by the tax return not being "logged" on the correct day.

2 Can I just agree that the taxman’s figure is correct, say the major reason is that I had assumed the account was a joint one and so I had missed about £800, and leave it at that (together with the figures for each of my accounts). Or can I just agree the figure but provide no explanation at all? Do all that once they have abandoned the invalid enquiry and told you that they will issue an assessment for the underpayment.

3 Since it looks as though I should pay an extra £200 (approx) for extra 20 % tax, should I immediately send a cheque for this amount on account. It doesn't really matter. At the moment they don't have a legally enforceable charge. Interest on £200 is only £6 per year (current rate is 3%). I would hold onto the money until they ask for it.

4 Since the same mistakes apply to 2009- 2010 tax return should I say this now and send another £200 cheque for that, start to work on the interest amounts, or should I wait? I would deal with this one now. Send a letter stating that you wish to amend box (x) of your 2009-10 tax return to (y) and that (z) amount of additional tax is due - for which you enclose the cheque. Saves them having to open an enquiry into that return.

BTW, don't worry about a potential penalty - HMRC would not seek a tax geared penalty on such a low amount of additional duty.