HMRC tax over/under payments

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  • #31654
    Anonymous
    Guest

    Looks like this will mean a significant amount of HB/CTB reassessment work, whether or not underpayments are paid back or not (see link below).I wonder if the underpayments can be treated as capital when the money arrives.

    http://www.dailymail.co.uk/article-1309639/Tax-blunder-rebellion-Experts-urge-1-4-pay-taxmans-mistake.html?ITO=1490

    And this is the organisation Ian Duncan Smith has in mind to deliver the Universal Credit.This latest botch-up, coupled with its abysmal record on tax credits, hardly inspires confidence.

    #88531
    Anonymous
    Guest

    Refunds of [b:6689808dcb]overpaid[/b:6689808dcb] tax will be capital – that’s clear enough from Reg 46(2). And even if they were treated as income, any overpayment would be irrecoverable as HMRC official error (by a fortunate accident of departmental responsibility).

    [b:6689808dcb]Underpaid[/b:6689808dcb] tax is more difficult. It’s rather like the overpaid Tax Credit scenario.

    People who have paid too little tax will have had their HB worked out on higher net income than if their tax had been calculated properly, so they haven’t received as much HB as they ought to have. If they have to pay the underpaid tax back now through an adjustmnent on their tax code, and if they are still on HB, it will all correct itself in the end: they will get more HB now to compensate. But if they are no longer on HB, it seems they lose out – all the authorities from Leeves right through to the present do not seem to me to allow retrospective reduction of income in such cases. The only recourse would seem to be a complaint to the Parliamentary Ombudsman asking for compensation equal to the amount of extra HB they could have had but now cannot have. It could simply be wiped off the underpaid tax slate.

    #112705
    allan
    Participant

    Hi

    Can i open this older thread back up….What happens where a customer has been asked to repay an underpayment of tax but they are now retired and their only income is State Pension? I have a customer in this situation and is currently not paying any tax so has had to agree to repay the underpayment via a monthly direct debit. Can i disregard this from her income?

    Thanks

    #112707
    Kevin D
    Participant

    Allan, see what you think of the following case law:

    R(IS) 4/05
    CSH/616/2007
    CH/0735/2010 (heard with CH/0737/2010)

    On the face of it, CSH/616/2007 is the odd one out BUT you’ll need to check for the reasoning in case the facts were different.

    #112708
    allan
    Participant

    Thanks Kevin

    I will give these a read.

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