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The Provincial Tax Pratitioner laments practical difficulties in dealing with HMRC on behalf of his clients.

Tax advisor: Doctor, I think I’m being ignored.

Doctor: Next!

I Think, Therefore I Am

I doubt French philosopher Descartes would ever have come up with his succinct proof of individual existence if the poor chap had encountered the 17th century equivalent of the 21st century HMRC. It seems to me that the more I think - I am doing things correctly - the less I appear to exist: in the eyes of HMRC. Is there a plot afoot to marginalise tax advisors and agents? After all, in a recent National Audit Office report on tax agents we appear to be making a complete cobblers of computing our clients’ tax liabilities. Unrepresented taxpayers are apparently doing a much better job. 

Breaking the Loop

When the Icelandic volcano was hurling great clouds of ash and dust into the atmosphere earlier this year, a lesser and almost completely unreported eruption was taking place in the UK. A violent outburst from HMRC’s computer had spewed out tons of PAYE coding notices that were soon flowing through taxpayers’ and agents’ letterboxes the length and breadth of the land. We were waist high in the infernal things and several members of staff developed REOS: Repetitive Envelope-Opening Syndrome. I now understand that HMRC is not going to send copies of P2 coding notices to agents. Good: I think. But in future neither shall we receive P800 calculations and various other self assessment notices that are sent to taxpayers.

Does ‘out of the loop’ strike a chord?

HMRC’s Sop to Agents

Oh no, I forgot; HMRC are thoughtfully including a statement on the letters that they should be shown to the individual’s tax advisor, just to be on the safe side. It’s a bit like the NHS sending a note to your dear old fit-as-a-fiddle gran, informing her in Monty Pythonesque terms that according to their records, ‘she has kicked the bucket, shuffled off her mortal coil, run down the curtain and joined the bleedin’ choir invisible.  She is an ex-gran.’

A very thoughtful footnote however, advises her it to show it to her medical advisor, just in case...

As Clear as Day; I Wish

A client recently rang me to say he had just received an unexpected tax demand. He asked if I had been sent a copy and I enquired whether he was having a laugh.

I had informed him when I submitted his tax return that an underpayment for 2008/09 would be collected through an adjustment to his PAYE code for 2010/11, and so he would have nothing to pay. Now HMRC were telling him he owed nearly £700. He naturally asked why, and in a tone intimating that I had misinformed him.   

I went online to check his statement of account, which as usual had all the clarity of a John Prescott lecture on macro economics. To me, these statements of account have never been easy to decipher since Self Assessment was introduced and the template appears to have been written by the late Stanley Unwin (for those too young to remember this comedian, please Google his name and all will become clear).

'Payment on account due…claim to reduce…amount included in PAYE code…net adjustments from SA return…amount due after any adjustment etc.’

Etc? Is this a universally acknowledged statement of precision? The words and figures swam before me, but after rifling back through the file, I gathered that the net result of this entire gobbledegook was an additional tax charge over and above the tax due on the income that, after careful marshalling of my few remaining brain cells, I had so carefully entered on the return.

My Fault?

A call to HMRC informed me the return had been amended after it had been filed. So it was obviously my fault then: a senior moment no doubt. I requested a calculation, which when it arrived included a total pension figure £2,500 more than mine. But which, of the five pensions had I obviously mis-entered?

I Think, Therefore I am Not (I do Not Exist as far as HMRC are Concerned)

I rang HMRC again to request the client’s employment history, and when it finally turned up the individual private pension amounts were exactly the same as those I had entered from the P60’s.

Which left only the state pension.

Yet another phone call to HMRC.

'The amount of state pension on your calculation is wrong,’ I snapped into the mouthpiece.

‘What do you think it should be?’

‘The exact figure I entered on the return,’ I hissed.

Silence, followed by,

‘Well we have a different amount.’

I felt a small nerve begin to flutter in the corner of my eye; obviously a precursor of an involuntary facial tic, reminiscent of Herbert Lom’s signature twitch in the Pink Panther films.   

‘You have the client receiving 52 weeks’ state pension.’

‘Er, have we?’

I stifled a maniacal whimper, and began to carve expletives into the top of my desk with a paper knife. Maybe HMRC were also the inspiration for Banksy, the prolific street graffiti artist.

‘But my client was 65 on 31 July. How on Earth has he managed to wrest a state pension from HM Government BEFORE he reaches retirement age.’

Silence.

‘We’ll have to look into it.’

Thank you for nothing, I muttered to myself. Oh, apart from the now permanent twitch in my left eye. 

What on Earth is Going On?

How can this happen? After my figures winged their way through the ether into HMRC’s computer, did the ‘I Robot’ syndrome kick in ( see previous article,  Chris? Chris? Who on Earth is Chris from HMRC?) and decide that the tax on the actual pension received was not nearly enough to replenish the Exchequer’s coffers?  Is it one giant step for a free-thinking microprocessor and one small step towards plugging the tax gap? (see Mark McLaughlin’s recent editorial.)

What if this taxpayer didn’t have an agent? He would no doubt have paid the £700 demand. Why did neither I nor the client receive an explanation of the erroneous amendment to the original figures on the return? Or any acknowledgment of a subsequent correction?

What is the point of me entering figures if HMRC ignores them? 

It reminds me of the maths teacher attempting to point out to a modern day 16 year old that his decimal point was in the wrong place.

‘I quite like it where it is,’ was the pupil’s disdainful reply. 

I think I’m going mad: ergo, I am.