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Where Taxpayers and Advisers Meet

HMRC-is it time to call the Army in?

etf
Posts:784
Joined:Mon Nov 02, 2009 5:25 pm
Re: HMRC-is it time to call the Army in?

Postby etf » Tue Aug 24, 2021 9:08 am

Well it looks as though I went too early when highlighting a potential 7 1/2 month delay in my earlier post. I've just chased a letter sent to HMRC PT Operations on 8 March 2021 and they are currently working to a 259 calendar day timescale. In metric units that means they are currently answering post received in December 2020 and so it appears I'll have to wait another 3 months for a reply. Can anyone beat an 8 1/2 month delay?

etf
Posts:784
Joined:Mon Nov 02, 2009 5:25 pm

Re: HMRC-is it time to call the Army in?

Postby etf » Thu Aug 26, 2021 11:56 am

someone is not the only one questioning the sense in HMRC introducing MTD in 2023:

The frequency of problems within HMRC’s systems suggests that the barrage of compliance changes, for example around the coronavirus furlough and self employed grant schemes, and the imperative to make tax digital are beginning to overload the department’s software development capacity.

Unsurprisingly, the SEISS API glitch prompted yet more accountants to question whether the tax department is actually equipped to roll out MTD ITSA in April 2023. As AccountingWEB member AdamMurphy put it, “This is exactly why HMRC should not be proceeding with MTD – they can’t even get current systems working correctly.


The more I think about HMRC being 8 1/2 months behind with their post, the more I am realising it is a potentially unretrievable situation without a major plan. It requires the world to stand still for 8 1/2 months to allow HMRC to catch up. That clearly is not going to happen. What is your plan HMRC?

robbob
Posts:3152
Joined:Wed Aug 06, 2008 4:01 pm

Re: HMRC-is it time to call the Army in?

Postby robbob » Thu Aug 26, 2021 12:05 pm

Unsurprisingly, the SEISS API glitch prompted yet more accountants to question whether the tax department is actually equipped to roll out MTD ITSA in April 2023. As AccountingWEB member AdamMurphy put it, “This is exactly why HMRC should not be proceeding with MTD – they can’t even get current systems working correctly.



The worst thing about this is that hmrc have communicated to software suppliers that this will only be fixed if accountants complain en mass to hmrc about this issue even though they are aware of the problem and are trying to fix.

The sheer cheek of any organisation who is at fault asking others to waste time pointing out the very issues they know about says how poor management here is at top level. I suspect relevant department want to be given "whatever is needed to fix" but havent ben yet due to their bosses not giving them the tools and they are desperate for the story to make it to the daily mail at which time head bods will wake up and take action - poor poor form here hmrc get your house back in order please ref buck passing.

someone
Posts:524
Joined:Mon Feb 13, 2017 10:09 am

Re: HMRC-is it time to call the Army in?

Postby someone » Thu Aug 26, 2021 2:58 pm

I was really only thinking about the minimum resources HMRC will need to support the rollout of MTD. (I think MTD is insane, but I was trying to be positive and just looking at what it will take to make it work)

There are going to be (I would assume) a huge number of unrepresented taxpayers in the initial go-live in 2023. Lots who only have one property, jointly owned, and it's not at all obvious (yet) how on earth that is supposed to work even for the simplest cases.

Clearly one of the two joint taxpayers is going to be uploading data based on a "digital link" to another taxpayers digital records whatever that means!

Get slightly more complicated - lets say the proportions of ownership change during the year - and even with cash accounting I'd be astonished if any "home use" MTD solution will handle it cleanly.

And where one tax payer is a minority owner whose gross receipts are below the 1K limit, there will be "missing" money. For smaller rents (say 12K/year total) that's almost 10% of the total income "disappearing." I can see any AI trying to analyse this causing a nightmare for many who get accused of deliberate tax evasion.
(It might actually make sense to change the proportions of ownership to stay outside of MTD in this case - but as most tax payers won't be aware of MTD until after the go live that may not be possible in practice)

If it's anything like NRCGT and the 30 day CGT regime, then the vast majority of people are going to be unaware of MTD unless/until their friends start talking about it down the pub - and that might not happen until the first few start doing their submissions with their accountant and start commenting about it.

So, IMO, HMRC are going to be utterly inundated with calls when this goes live. My googling suggests 2.6 million landlords and half of them own just one property. It's not clear to me whether 2.6 million includes H&W separately or together. But however it is, there's clearly a huge pool of "amateur" involvement here (and I include myself in that)...

I have no feel at all for the scale of the change for self employed. But I would guess it's more difficult than property...

etf
Posts:784
Joined:Mon Nov 02, 2009 5:25 pm

Re: HMRC-is it time to call the Army in?

Postby etf » Thu Aug 26, 2021 3:13 pm

I couldn't agree more robbob.

HMRC has to act honestly in the same manner it expects taxpayers to declare all of their income and capital gains on their self assessment tax returns. I am mentally composing my latest NRCGT post with a current heading are HMRC less trustworthy than the Taliban? This is aimed at those at the top who know they have not treated taxpayers fairly and are blocking the flow of information through Freedom of Information request denials because they know the statistics support my headline.

HMRC only publish the penalty appeal statistics once the review/scrutiny of that period has ended e.g. my professional body agreed the available FOI figures looked interesting but they were reviewing a later period where I was unable to secure the information (because HMRC suddenly decided to deny my FOI requests) and it is apparently too late now the figures are available because the review has already taken place. You couldn't make it up and in my opinion professional bodies need to step up their game and insist all available figures are made available before any review commences. Otherwise it is like ranking football player performance before a match has been played.

The press/Taxationweb could have a field day if only journalists would challenge some of HMRC's performance/decision making from the top.

etf
Posts:784
Joined:Mon Nov 02, 2009 5:25 pm

Re: HMRC-is it time to call the Army in?

Postby etf » Thu Aug 26, 2021 3:27 pm

I agree with your warning shot too someone. You just know there is potential mayhem on the horizon. Surely with 8 1/2 month post delays there should be a postponement at the very least to allow HMRC to try and right the heavily listing Titantic which they are currently on board.

PS it is not just Taxation where this applies. I originally trained as a teacher and my contemporaries who are now coming to the end of their careers tell me they are regularly faced with new young ambitious Heads who want to change the world in the same manner as someone did (and failed) 10 years previously.

someone
Posts:524
Joined:Mon Feb 13, 2017 10:09 am

Re: HMRC-is it time to call the Army in?

Postby someone » Fri Aug 27, 2021 8:45 am

They've finally managed to deal with my tax code change. Depending on whether you count it from my 2019-20 SA submission (whitespace note - which, ironically told them to do nothing with my tax code but they ignored and changed my tax code anyway) or my chaser online "tell us your tax code is wrong" when I finally found how to tell them something was wrong, it's only taken 11 months (Sept 2020) or 4 months (Apr 2021). They're currently short about 7.5K as a result of this, 2/3 of which I will pay in January to cover the 2020-21 year.

The taxcode letter was a bit weird too. In Note 5 it says "Due to an in year adjustment to your tax codes(s) we think that you will owe HMRC 1237.60. So that you pay the right tax for the year, we have included an adjustment to reduce your tax-free allowance by 4722 to collect the 1237.60 tax in equal instalments from now on"

I don't know where the 1237.60 is coming from, nor the "equal instalments" because I worked through the tax tables and I expect to pay approaching 3K extra in tax in September compared to the earlier months in the year and then 400 per month from then on. (But perhaps I've done something wrong with the tax tables as I've never tried to use them before)

(Don't anybody waste any time on trying to understand what has happened unless it's completely obvious at first glance - I'm happy that my tax code is now approximately correct and I'll be paying around the right amount of tax by the end of the 2021-22 year, I just think the 'equal instalments' is very misleading as I expect my take home pay for September to be insufficient to cover my regular commitments even assuming the deductions are capped at 50%)

etf
Posts:784
Joined:Mon Nov 02, 2009 5:25 pm

Re: HMRC-is it time to call the Army in?

Postby etf » Mon Sep 06, 2021 11:59 am

someone-this article may be of interest.

https://www.accountingweb.co.uk/tax/hmrc-policy/mtd-itsa-your-questions-answered-landlords?utm_medium=email&utm_campaign=AWUKTAX060921%20with%20Expo%20takeover%20template&utm_content=AWUKTAX060921%20with%20Expo%20takeover%20template+CID_53d90eb147daf251918ae853e9f87d16&utm_source=internal_cm&utm_term=Read%20more

D&C
Posts:56
Joined:Mon Nov 25, 2019 11:35 pm

Re: HMRC-is it time to call the Army in?

Postby D&C » Mon Sep 06, 2021 10:43 pm

Re your tax code change.

It sounds as though you are making the assumption that the new tax code will be operated on a cumulative basis when it will almost certainly be operated on a non cumulative basis.

Resulting in a much smaller deduction than you are expecting the first time the new code is used.

someone
Posts:524
Joined:Mon Feb 13, 2017 10:09 am

Re: HMRC-is it time to call the Army in?

Postby someone » Tue Sep 07, 2021 8:34 am

Re your tax code change.

It sounds as though you are making the assumption that the new tax code will be operated on a cumulative basis when it will almost certainly be operated on a non cumulative basis.

Resulting in a much smaller deduction than you are expecting the first time the new code is used.
Thanks.

The new taxcode is K391X which replaces 1007T. I did wonder about W1/M1 but my googling suggested that X just means "will be reviewed at EoY, not that it's also a W1/M1 code (I looked here:
https://www.gov.uk/tax-codes/what-your-tax-code-means
and the notes on the back of my coding notice Tax Code ending in X "Shows we will review the tax you have paid after 5 April". I'd have expected M1X or something like that for W1/M1 basis.)

I believe I have been underpaying tax at a rate of about 400 per month based on my EoY projections. So to catch up I'd expect my end September paycheck to be 2800 higher than August's figure for tax deducted. It's not a huge deal for me whether they collect it in one go or in 6 instalments, I've already put the money aside, it's just whether I have to trickle it back or do it in one go (Six equal instalments makes a lot more sense based on what the notice says and means I don't have to worry about ensuring there's extra money in my account by just after payday.)


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