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Those Tax Forms

June 8, 2014

Many of those who have the misfortune of having to submit a self assessment tax form on paper will be aware of just how much more difficult things have become in the last two or three years.

A few years ago HMRC staff considered themselves as public servants rather than the tax farmers they now appear to be. They would not help you to minimise your tax bill; that never was their job, but they would explain things properly and help you as far as possible to file an accurate return.

I speak of those who deal with taxpayers over their own personal tax affairs. If you are acting as a trustee, a company director, or as a paid agent for someone else you are treated with respect. Otherwise they treat you like dirt.

Of course they want you to file online and now claim that most people do, but I am not sure if I believe that claim. There are reasons why many cannot. Either they are not confident enough to learn how to use the software, or may be required to submit supplementary pages for which HMRC does not provide the software. There is commercial software but HMRC does not warrant its accuracy, and holds you responsible for any cock ups.

If you do have to submit on paper and have to phone HMRC they are not normally openly rude; that would open them to formal complaints, which I guess could affect their bonuses, but they are passively unhelpful. If you as a tax payer state a problem, they never offer solutions. You are reduced to asking questions to which the answer is a simple yes or no. But if you suggest a solution and ask if that’s the right approach they will never say more than, ‘you could always try that’; they won’t even say whether it is acceptable to them.

Having submitted your return, you might be lucky and receive back a calculation that looks correct. If it looks wrong however the fun really starts. The first response is always, ‘We have done the calculation on the figures you have submitted.’ Never accept that claim, it’s bullshit. It assumes firstly that the calculation software is correct, (which it probably is, but how can you know?) More importantly it assumes your figures are correctly transcribed. The days that your figures are typed manually into their system are gone. The pages of your return are scanned in and not checked by human eye; HMRC staff have had to admit this to me when I challenged them.

Anyone who knows anything about Optical Character Recognition software knows that it is not perfect; it makes mistakes. Ideally if it is not certain it can read the page accurately it will reject it and then human beings would have to input it, but this is not in my experience what seems to happen with the HMRC software. It just adds in spurious figures which can double your tax bill or worse. Your first step is to find out what they have got in their system. You ask for their record of what you submitted. They will send you (after a considerable delay) a very poorly formatted and almost illegible print out of what is in the system. When you track down the spurious figures and point out the error, they will ask, ‘Do you want to change your figures’, and will warn you that submitting incorrect figures (even if as a mistake and even if the spurious figure is to your disadvantage), is a very serious offence. If you say, “No I do not want to change what I submitted I simply want your mistake put right”, they will accuse you of being delusional. If you then ask for a photocopy of your paper return, they will say they do not keep paper copies, and that is probably true but they will NOT say that they keep the scanned in images before conversion to text. If you ask for that they will say that it is too costly to provide.

At that stage you have to submit a formal complaint. The scanned in copy then magically appears and they have to give way on the substance of your complaint and correct the figures without any further threat of fines etc. However they will never actually apologise.

But that isn’t the end of their tricks. Before you even get to discover the misreads, your return may be rejected ( some months after submission) on a technicality. Suppose for example you are registered as a self employed author and you have published nothing that year. You submit a nil return. If you omit to supply the date up to which the books were made up, the form will be rejected, and you have to ask for a new blank copy of all the forms; they won’t be sent with the rejection notice. This delay of course severely compromises your ability to get errors corrected.

Another trap is on benefits. Some benefits such as Attendance Allowance are not taxable, see:

http://www.hmrc.gov.uk/manuals/eimanual/EIM76100.htm

but HMRC do not want you to realise this. If you ask them the direct question on the phone, they will not give you a straightforward answer but suggest you read the notes for guidance. However the ‘Brief Notes: Tax Return’ form SA150(B) sent out with the basic tax form SA100 DO NOT clarify this point. It is true that the fuller notes, ‘How to Fill in Your Tax Form’ form SA150 do clarify this point, but the existence of this document is not referred to in SA150(B), and if you phone up you will not be told of its existence.

Is that a reasonable way of treating those caring for an elderly parent who have to fill in the tax form?

You may well ask why fill up your own form, why not use an agent? Apart from the the fee involved all kinds of problems can arise – be wary.

If you do land up submitting a tax form on paper, the following tips might help:

a. NEVER submit your return on forms downloaded from the internet and printed at home. Unless you have a top of the range colour laser printer it is highly likely that the OCR software will misread them. Phone the order line and ask for all the forms you might need.

b. Do download all the relevant notes for guidance and read them before you start. Otherwise you could waste time for example filling in a CGT form you don’t need to.

c. NEVER submit a form with a crossing out on it. This used to be OK but now the scanning operation will produce all those spurious figures. Instead always fill in the form in soft pencil, double check it, ink in the figures and carefully rub out the pencil marks.

d. ALWAYS take a photocopy or scan in of every page of every form you submit. Otherwise when you get to the complaints stage they will convince you that you made a mistake. Making notes is not enough.

e. When downloading or ordering notes for guidance ALWAYS obtain SA150 and do not be fobbed off with SA150(B). ALWAYS write a letter of complaint that you are not sent or offered  SA150 automatically.

f.If in spite of the above you have a source of income which are are still not sure whether it is taxable, DO NOT include it in any of the numbered boxes. Instead list it in ‘any other information’, explaining that you have been unable to find out whether it is taxable. It is highly unlikely that anyone will read this unless they do an audit on you, but you are covered if they do.

This information is provided in good faith but in view of the Kafkaesque nature of the UK tax code and associated penalty regime, I cannot accept responsibility for the consequences of reliance on it.

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