It emerged recently, that HMRC had effectively asked thousands of taxpayers to pay the same tax bill twice, after the tax office issued paper copies of tax assessments that had already been paid. Regrettably though, these paper copies did not indicate anywhere on them that they were indeed copies and for all intents and purposes, appeared to be demands for more tax.
You only pay twice: Bewilderment and muddle
The confusion started at the beginning of the tax year in April 2021, after HMRC sent taxpayers, who had opted for paperless communication, a digital version of their tax assessments via the taxpayers’ online personal tax account. After 4 months, HMRC suspended the issue of digital assessments, after questions were raised as to its legality.
Our wonderful tax authority then pressed ahead and sent paper versions of these tax assessments, whilst their legal experts updated the tax legislation. The digital assessments were subsequently given the legal all-clear to carry on, but unfortunately this didn’t happen until April 2023, and in the intervening months, confusion reigned.
You only pay twice: Why not a simple email?
HMRC’s explanation for the re-serving of the document in paper form, was to ensure that the assessment had been validly served, which is fair enough. Regrettably though, the tax office did not send a covering email to explain why they were sending a paper assessment, nor did they include a letter of explanation with the paper copy.
The result of HMRC failing to exercise commonsense, was those taxpayers who had already settled their digital assessment, were left utterly confused by the duplicate assessments, which still listed the full amount.
In fairness, the paper versions did include a footnote clarifying that any payments may have not been included in the above calculation. Disappointingly however, taxpayers concerned about whether or not they’d paid the correct tax, found precious little support from HMRC contact-centre staff, who apparently had not been given access to the tax office assessment payment system.
You only pay twice: Simple tax assessments
All of the tax assessments issued, effectively twice, were simple assessments, which were brought in on 6th April 2016 as a means of preventing taxpayers from being dragged into the self-assessment system. When HMRC has enough information to calculate the tax due, a tax assessment is made by HMRC rather than a taxpayer doing so via the normal tax return system.
The taxpayer then has 60 days to challenge the figures from the date of issue of the assessment, but HMRC did not factor in that for individuals not au fait with the tax system might struggle understanding, what was happening and why. Even HMRC admitted that a major review of the simple assessment project in 2019/20 “threw up some anomalies.”
In one well documented case, in 2020 accountant Penny Price had not one, but three simple assessments raised against one of her clients, and in each case HMRC got the bank interest wrong!
You only pay twice: HMRC has previous form!
This HMRC’s latest cock-up surrounding the re-issuing of paper simple assessments, where the tax debt has already been paid, is yet another example of a HMRC project not being fully thought through before implementation. I have seen this time and again when a new piece of the tax compliance mechanism is bolted onto the existing machinery, without working out how the two functions will mesh together.
Just one example is last year’s bungling of the introduction of amendments to the Capital Gains Tax, system for property sales. HMRC decreed that if any CGT was due on a property sale, instead of declaring this at the end of the year vis their Tax Returns, instead they made the taxpayer responsible for assessing and paying CGT within 60 days of the sale. Not unexpectantly, this turned out to be a recipe for disaster.
Tax Accountant’s view
I really am getting fed-up with HMRC’s apparent Baldrick (‘I have a cunning plan’) approach to tinkering with the tax system; as Blackadder regularly pointed out, there is always a ‘teeny weeny problem’ with most if not all cunning plans, especially those brought in by the Revenue!