Tag Archive | "litrg"

LITRG springs to the Revenue’s defence

HMRC has been widely criticised over its PAYE assessment errors for the tax year 2011-12, but the LITRG has leapt to the Revenue’s defence saying the errors are actually reconciliations.

The LITRG made its comments after HMRC announced it was starting the PAYE reconciliation process and as many as 3.5 million taxpayers could receive a refund, whilst 1.6 million will get a letter telling them they have not paid enough income tax.

John Andrews, the chairman of the LITRG, explained that there are three sides to PAYE; the employer, HMRC and the taxpayer. Although most of the system is computerised, it was never intended for PAYE to collect the correct amount of tax in 100% of cases. It does do so in the majority of cases where somebody has just one job, or one pension, but if someone has changed jobs, has more than one job, or multiple pensions, their ‘account’ needs to be reconciled at year-end.

He went on to say that changes need to be reflected in PAYE codes and in order for the system to generate the correct code, it needs accurate information from the relevant quarters. If an employer for example does not forward data about new starters or leavers, the system is unable to amend its records.

The Real Time Information system should do away with a lot of these problems but that will not be fully implemented until April 2014. If HMRC invests wisely in IT capability and customer support, we should all receive a better service.

© 2012 All rights reserved. Reproduction in whole or in part without permission is prohibited.

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When will HMRC improve telephone response time?

Contractor accountants will probably agree that HMRC should do something to improve the time it takes to answer incoming calls at its contact centres.

The Low Income Tax Reform Group is the latest group to complain that standards have been slipping at the Revenue over the last few years. In 1997, HMRC pledged to answer 91% of all calls within 30 seconds, but lately it has been failing to meet that objective.

The LITRG advises people to keep a note of the time they contacted HMRC if they are unable to get through, and then if they get any comeback because they were unable to comply with Revenue requirements, they should lodge a complaint and ask for compensation.

The chairman of HMRC last year informed the Treasury Sub-Committee that he hopes to see a steady improvement in performance when it comes to answering phone calls within the department.

This is a particularly busy time for Revenue staff. We’ve just had the end of the tax year and employers throughout the UK now have to file their end-of-year payroll reports. As usual, there will be a lot of queries relating to these procedures and HMRC phone lines are likely to be busier than usual. This can prove extremely frustrating, especially for small business owners who have neither the time nor the inclination to spend hours hanging on the end of a telephone line.

We hear that HMRC still needs to reduce its headcount further, but if it can’t manage to answer calls in a timely manner now, how on earth will it manage once more redundancies have been implemented?

© 2012 All rights reserved. Reproduction in whole or in part without permission is prohibited.

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HMRC doubles corporation tax take from large business investigations

HMRC raked in an additional £4.06 billion through its investigations into corporation tax last year.

The Large Business Service compliance unit has doubled the amount it raised in just five years. According to McGrigors this proves that the coalition is not giving into the needs of big business as some people have implied.

Jason Collins, a partner at the law firm, the Revenue is trying to get as much money as they can from investigations into big corporations. UK Uncut and other tax lobbying groups in the UK claim the government has gone soft on large businesses, but these figures prove this is not true.

The Treasury is trying to make Britain a more attractive place for companies to operate in by reducing the rate of corporation tax. However, big businesses might think twice about setting up here if they believe HMRC has a strategy to squeeze large corporations dry, he added.

Meanwhile, the LITRG has issued guidance so that taxpayers can check their new PAYE code is correct.

By early March, HMRC will have issued about 18 million coding notices to pensioners and employees informing them of their PAYE code for the tax year beginning in April.

There are sections in the guide explaining the basics of PAYE codes, how to check your code online if you are a self-assessment taxpayer and how to contact HMRC by phone if you have problems.

There have been problems with Revenue coding notices over the last couple of years and every taxpayer should check their code carefully and query anything they do not understand. Failure to do so could mean you pay more or less tax than you should do and this can lead to problems further down the line.

© 2012 All rights reserved. Reproduction in whole or in part without permission is prohibited.

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What do accountants for contractors think about online self-assessment filing?

The National Audit Office has praised HMRC for persuading people to file their tax returns online, but says it is not clear whether the system provides value for money.

The NAO says that more than 11.5 million people a year now use online filing. However, some users have complained about access to HMRC’s website at busy times and the Low Incomes Tax Reform Group is calling on the Revenue to offer other alternatives to people who do not have Internet access.

Online filing has reduced processing costs, as well as postal, stationery and storage costs. Cumulative savings by the end of this financial year are expected to be £220 million and the drive to persuade people to file online is on time and within budget.

However, the NAO says HMRC is not able to draw a comparison between the costs of paper and online filing. It is therefore impossible to conclude that the benefits of online filing are being maximised and the system has been successful in delivering value for money.

Robin Williamson from the LITRG said that it should not be made mandatory to use the Internet to conduct dealings with HMRC and robust, well-advertised options must be made available to people who cannot transact online.

It’s both reasonable and sensible to encourage businesses to use digital channels to communicate with the Revenue but the government department should not forget that some individuals do not have access to the Internet or the capability to cope with online filing, he added.

Some professional organisations have also questioned whether it is cost effective to file corporation tax and VAT returns online.

© 2011 All rights reserved. Reproduction in whole or in part without permission is prohibited.

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Employer-supported tax relief restrictions branded unfair

The Chartered Institute of Taxation has branded the government’s proposals to restrict the tax relief on childcare supported by employers as unfair and unnecessarily complicated.

Both the CIOT and the LITRG voiced their criticisms in a pre-budget government consultation. The chair of the CIOT’s sub-committee on employment taxes, Colin Ben-Nathan, said the existing regulations are well established and reasonably simple to administer.

The government’s new plans will make matters more complicated and increase the administrative burden on employers even though the coalition has committed to a simplified taxation system. It will also mean that people with similar roles and similar incomes would be allowed different amounts of tax relief.

The technical director of the LITRG, Robin Williamson, pointed out that it is often advantageous to claim help with the cost of childcare through tax credits rather than the offered vouchers. However, there are complex calculations involved and the proposed alterations will make them even more complicated.

Furthermore, the current proposal is unworkable, he continued. It appears to rely on something similar to a ‘back of the envelope’ method of calculating income. The Low Incomes tax Reform Group is concerned that the model could be used in the future to restrict other tax reliefs such as the proposal to withdraw child benefit from high earners.

The LITRG would like to see a system that provides certainty for employees and is simple for people to understand.

The previous government initially proposed restricting tax relief on employer-supported childcare in the 2009 pre budget report. It was confirmed by the present government in the last budget and will apply to people joining employer schemes after the 5th of April this year.

© 2010 All rights reserved. Reproduction in whole or in part without permission is prohibited.

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