2010

PAYE underpayments for Christmas: help for you Received a P800 tax calculation? Having a battle with HMRC? Want to know what to do next? The Christmas holidays may be the time you can get to grips with it. Since September, we have provided a variety of advice guides which should provide you with all the help you need. 22 December 2010
HMRC refuses to write off tax – what next? Have you challenged a PAYE tax calculation (‘P800’) which showed you had underpaid tax? Have HMRC replied to you, possibly in the form of a standard letter containing very little explanation, saying that you still have to pay? 17 December 2010
VAT online filing challenge mounted LITRG is supporting appeals mounted by several individuals, who would otherwise have been unrepresented, against the requirement that VAT returns must be filed online. The first tribunal hearing took place at the First-tier Tribunal in London on Monday 29 November. Ms Anne Redston of Temple Tax Chambers was the barrister acting for these appellants, instructed by solicitor and LITRG volunteer Ms Eile Gibson of Tower Bridge Tax Practice. 9 December 2010
Is there a tax policy for pensioners? Much was made of the coalition policy to increase personal allowances towards a target of £10,000 for those under 65. Less has been said about the tax policy towards pensioners. With the announcement at the end of last week of the personal allowance figures for pensioners, we can see that unless a new tax strategy is put in place the advantages given to pensioners, as compared with the working population, will be eroded. 7 December 2010
PAYE tax calculations – pensioner problems HMRC’s ‘automatic reconciliation’ of individuals’ PAYE records continues, with tax calculations for 2008/09 and 2009/10 landing on doormats. In this article, we outline some issues to look out for with a particular focus on pensioners, and give you an update on typical cases we have seen so far. 2 December 2010
Credit where it is due? Do you know all (or any) of the circumstances under which you can get a credit towards state benefits without paying a national insurance contribution? Well, neither did we know them all. But how can you check whether you are receiving what you are entitled to? This and other questions we want to see addressed as the Department for Work and Pensions consults on National Insurance ’credits’. 1 December 2010
Government to replace offensive terminology in tax statute During Parliamentary debates on the Finance Bill (which passes its remaining Parliamentary stages today) the Exchequer Secretary to the Treasury – David Gauke MP – committed the Government to changing an outdated and offensive definition of ‘incapacitated person’ in the tax laws. Having campaigned for nearly eight years for this wording to be repealed and replaced, LITRG are delighted with this result. 22 November 2010
Students – beware of PAYE problems An estimated 6 million people are likely to now be receiving tax calculations having not paid the right tax under PAYE, and students in particular can find the system struggles to keep up with their working patterns. Here we aim to give a short PAYE guide for students who are now embarking on their studies and supplementing their funds by working during term time. 11 November 2010
No longer being forced to retire at 65 – the bigger picture The Government recently consulted on proposals which will prevent employers, except perhaps in exceptional circumstances, from forcing employees to retire at age 65. This is of course coupled with confirmation in the recent Spending Review to step up the escalation in state pension age for both men and women to 66 by 2020. LITRG makes a number of points in response as to the impact of the line between working and retirement age becoming increasingly blurred. 5 November 2010
Universal credit – panacea or problem? The benefits system is to undergo its biggest overhaul for a generation, with many existing tax credits and benefits being replaced by a ‘Universal Credit’. Whilst we broadly welcome the initiative, there is as yet insufficient detail to tell whether it will address all of the existing system’s problems. We urge the Government to tread carefully, postponing major reform until the law is in place, the systems are ready and tested and all of the practical issues have been fully thought through. 4 November 2010
Error and fraud – physician heal thyself A joint policy document on error and fraud was published by HMRC and the DWP this week. It is breathtaking in its lack of recognition that error and fraud are two quite different concepts and in playing down the responsibility of both government departments for official error. If error is to be dramatically reduced government departments have to look in the mirror and acknowledge their own starring role in contributing massively to that error. 22 October 2010
What the taxman’s cuts mean for you Today the axe fell on the government department – HMRC - which gets in most of the money for the public sector. A difficult balancing act for any government is to make cuts in HMRC without killing the goose that is laying the golden eggs. The government decided to give HMRC more funds in order to collect more. But there are two sides to this coin.... 20 October 2010
PAYE tax calculations – round two After the initial “trial run” of sending out tax calculations at the beginning of September HMRC have started again in the last few days sending out more calculations, having learned some lessons. LITRG’s advice is still to treat these calculations with great care. The amount shown may well be incorrect and, if an underpayment is shown, you may very well not need to repay it. 12 October 2010
Paper Tax Returns - remember the 31 October deadline Paper Self-Assessment tax returns for 2009-10 have to reach HMRC by 31 October 2010 otherwise you risk being charged a late-filing penalty. Recalling the postal difficulties experienced by paper filers in October last year it would be good to get your return submitted well before the deadline, especially as 31 October falls on a Sunday this year. Here is a recap of the rules. 1 October 2010
Update on PAYE tax calculations The practicalities of dealing with PAYE tax calculations are beginning to unfold for HMRC as taxpayers react to the first batch of underpayment estimates. It was certainly a wise decision by HMRC not to have pushed the big button on their new computer and immediately sent out large volumes of tax calculations. It is also clear that more help for those on low incomes is required. 1 October 2010
PAYE improvement – the discussion In late July, HMRC published a ‘discussion document’ inviting views on suggested future reform of the PAYE system, with the aim of reshaping it to fit today’s working and pension patterns. Whilst we welcome the opening of discussions in this area, we do so with a note of caution – HMRC must ensure that systems are ready, data is clean and that robust processes are in place before moving forward. 23 September 2010
HMRC costs where debts are pursued to court In the summer, HMRC issued a technical discussion document setting out a proposed scale of fixed costs they intend to claim where they successfully pursue debts via the courts in England and Wales. Our response highlights where we feel safeguards are required – particularly for debtors who genuinely can’t pay. 23 September 2010
Tax policy making – the low-income voice At the time of the June Budget, the Treasury and HMRC jointly published a consultation document inviting views on the processes behind devising future tax policy. LITRG’s response focuses on how individuals’ voices can be heard and encourages government to focus more on those who currently struggle to be heard. 22 September 2010
HMRC complaints – Adjudicator’s report out Judy Clements OBE, Adjudicator, has published her latest report saying that her office has made good progress in resolving HMRC complaints. LITRG welcomes the Adjudicator’s commitment to continue working with us and others to improve complaints procedures, particularly for those on low incomes. But what will she be saying in her next report, in the wake of HMRC 6 million tax calculations being sent out? 21 September 2010
PAYE calculations – don’t overdo the hype LITRG is all for bringing HMRC to account when it has let down the low income population; but we are also clear that we want good and accurate information to be provided to those same people. With very little notice we provided short-term solutions to a short-term issue for the 45,000 people who could have been affected by the HMRC initial trial run. The background to the current difficulty has been lost in the hysteria and low income people may be being scared unnecessarily. 9 September 2010
PAYE tax calculations – check and challenge Taxpayers receiving tax calculations are in need of help – particularly if they show that they owe money to HMRC and cannot afford to pay for a tax adviser. We do not feel that HMRC have done all they could to help the vulnerable and the uninitiated – something which we hope will be improved before the large bulk of the 6 million calculations are sent out. 7 September 2010
Tax underpayments - warning Over the next few weeks, millions of people who pay tax through PAYE will receive calculations from HMRC telling them they have either underpaid, or overpaid, tax for the last two years.Any calculations produced by HMRC which result in an underpayment of tax should be treated with caution. It will be by no means certain that they will be correct or should be agreed. 4 September 2010
HMRC press ahead with Enquiry Centre changes In such times of austerity, it comes as no surprise that HMRC are going ahead with changes to their Enquiry Centre opening hours. Today’s published response to the recent consultation on the impact of the changes on minority groups promises further ‘mitigating action’ for those who will always need face to face help. LITRG’s aim will be to seek out evidence of those promises turning into actions. 27 August 2010
Tax on children’s savings from age 16 Most children do not have enough income in their own right to pay tax, so someone (usually a parent) can register to have interest paid on their accounts without tax deductions. But from the 6 April after they reach age 16, the child has to re-register otherwise (often without any warning from the bank or building society) tax deductions will begin. 25 August 2010
Tax return receipts - too much to ask? In December 2005, without prior consultation, HMRC announced that their Enquiry Centres would no longer issue receipts for hand-delivered tax returns – a change in policy which impacted most on the unrepresented. Combining the factors of a tougher penalty regime, HMRC’s increasing tendency to mislay papers and the majority having moved to online filing, how can HMRC continue to justify not offering receipts to the remaining paper filers – often their most vulnerable customers? 6 August 2010
New Minimum Wage rule to reduce wages of some low-paid From 1 January 2011 National Minimum Wage regulations change, preventing low-paid workers from participating in travel and subsistence expenses ‘schemes’ used by some businesses. LITRG is disappointed that the Government has not agreed to our suggested wider review, without which many low-income workers will be worse off still. We hope that the new ‘21st Century Welfare’ consultation will be open to suggestions to improve the position of low-income workers facing high travel-to-work costs. 4 August 2010
Tax credits renewals 2010 By 31 July most people who receive tax credits must complete and return their renewal forms, or telephone the helpline and complete the process by phone. Even if you no longer want to claim, or think you are no longer entitled, you must still complete the renewals process. 19 July 2010
Tax credit changes in April 2011 – the facts The emergency budget set out several substantial changes to the tax credit system. Some are straightforward, others less so. In this article we look at the changes which are proposed for the next tax year beginning in April 2011 and anticipate what they may mean for claimants. 15 July 2010
School’s out for summer – check your tax credits As the end of the school year approaches, students switch their attention from exams to the summer holiday fun ahead. Unfortunately for parents, summer holidays can also signal lots of tax credit changes that need to be resolved before the fun begins. Here we draw attention to some of the issues facing parents with children of all ages this summer. 14 July 2010
HMRC propose shorter helpline opening hours Across government pressure mounts to save costs. And as part of a review of frontline services, HMRC now propose to shorten helpline opening hours. But HMRC have failed to fully assess the resulting impact on minority groups. Moreover, the strategy will hamper a longer term move to online services, which can only be achieved by offering customers the right support. 1 July 2010
Emergency Budget - a compassionate axe? The new Chancellor today unveiled his Emergency Budget and tried to make the pain of cuts and tax rises as small as possible for those on low incomes. Inevitably, if you are swinging a big axe, you are going to damage some unintended victims. LITRG tries to identify some low income groups who may need support after the dust has settled. 22 June 2010
Right to Control ‘Trailblazers’ need clear regulations Disabled people who take up the option of an individual budget which they then choose to spend according to their needs can get caught up in the tax system, for example as employers of their carers. LITRG has therefore called for tightening of draft regulations for ‘trailblazer’ local authority pilots to ensure that there is clear responsibility to provide tax help and support. 16 June 2010
The changing face of 'face to face' HMRC have been cutting back on their face to face service for several years now with the result that we are left with ever fewer Enquiry Centres. And those that remain frequently do not provide so valuable a service to HMRC’s vulnerable customers as once they did. There are now plans to ‘reshape’ the service further so that many people will either miss out on vital support or turn to the voluntary sector for help. 10 June 2010
The practicalities of claiming a tax refund There are a number of reasons why you might pay too much tax and have to claim a refund. Here we look at the practicalities of claiming tax back and give some tips on how to make sure yours is processed as quickly as possible 4 June 2010
Your rights explained HMRC’s powers in relation to dealing with mistakes or fraud by taxpayers have been undergoing changes for some time now, many of which are explained in their ‘compliance factsheets’. But LITRG is unhappy as these factsheets fail to set out taxpayer rights fully; so we decided to list them ourselves. 17 May 2010
Travel expenses - a review is long overdue Allowing travel expenses against income is a difficult area generally, but particularly for the low-paid due to the interactions of tax, National Insurance, National Minimum Wage and means-tested benefits. Responding to a recent Government consultation, LITRG argues for a comprehensive review of the rules. 13 May 2010
Income tax changes in a coalition One of the subjects for the negotiations in the coalition talks between the Liberal Democrats and the Conservative party has been an increase in personal allowances for tax purposes. Because of our complex tax/benefit interfaces, even a simple change to personal allowances is not straightforward in its impact. 12 May 2010
Childcare vouchers - still a trap for many At the end of 2009, campaigns were launched to save the tax advantages of childcare voucher schemes. Comments which described the proposed withdrawal of tax relief on them as an attack on “hard working families” were misguided as many families are in fact better off declining any employer offers to sacrifice salary for vouchers. 29 April 2010
Student loan repayment pointers Are you a student loan borrower who has now left a higher education course? Whether or not you need to make loan repayments and how you do so depends on your situation. Here we take a look at the basics, some less well known facts and a few final notes of caution. 26 April 2010
HMRC home visits – how do you get one? HMRC have a published policy to offer home visits to people who need help but cannot deal adequately with matters by telephone or letter, or get to an Enquiry Centre. However it seems that this service is being denied to eligible customers by some local HMRC offices. 21 April 2010
Tax slip-up on your April payslip? Problems with PAYE Codes for the 2010/11 tax year have been well-publicised, but many may only now realise they have a problem as April payrolls are processed. Those people who do not normally get payslips when they are paid need to take particular care. 15 April 2010
Election Purdah. What is it for? Government departments sometimes seem to go into paralysis as soon as a General Election is announced. Civil servants take it very seriously, but for onlookers it can seem rather strange. 6 April 2010
Offshore tax - punishing the sins of the innocent? Whilst acknowledging that overseas tax matters can be complicated, a recent HMRC consultation suggested that anyone getting them wrong should be penalised as if they had deliberately set out to commit tax fraud. Having expressed significant reservations about this principle and the potential impact of the proposals on the low income population, we now (partly) welcome the more tolerant response confirmed in the Budget. 29 March 2010
Budget 2010 - The Prelude There were few surprises for those on low incomes as the Chancellor presented the first of at least two Budgets in 2010. The real meat will come in Budget 2010 – Part 2 expected to be in June. But in the meantime it is worth reminding ourselves of the changes that will happen from 6 April. 24 March 2010
Reclaiming tax - time limits cut Time limits for reclaiming overpaid tax are about to be cut from nearly six years to only four years. Although HMRC have reminded agents about the changes, it seems they have neglected to warn the general public. 23 March 2010
Working with tax agents – what HMRC should do next As HMRC propose new powers to tackle perceived ‘deliberate wrongdoing’ by tax agents, LITRG again asks them to give more thought to the wider issues of working with various kinds of intermediary other than just tax professionals. 10 March 2010
Cross-government collaboration needed to get people into work A recent DWP consultation on housing benefit reform discusses how claimants can be supported as they move off benefit and into work. Whilst the objectives are commendable, LITRG urges cross-working with HMRC to ensure that tax and tax credits interactions are fully considered. 4 March 2010
Long-term sick to become much poorer Government plans to move existing incapacity benefit claimants on to employment and support allowance could cause serious reductions in income for thousands of people. LITRG are concerned that the full tax and tax credits impact of proposed changes have not been fully evaluated. 2 March 2010
Tax on pensioners - time for change The influential Public Accounts Committee have called for change in how HMRC deal with the tax affairs of pensioners. LITRG has been calling for such change for many years; might this now be the time when something is done? 27 February 2010
HMRC mislead employers on tax credits HMRC are tasked with increasing the take-up of tax credits. While many do take them up, HMRC use such misleading marketing messages that they also put off a large number who might qualify.That number includes some of the more vulnerable customers of HMRC. 19 February 2010
Small employers – are you ready for online filing? The end of the tax year 2009-10 on 5 April also sees the extension of compulsory online filing of end of year returns to nearly all employers. Many may be unprepared for this change and not realise that early preparation is needed if they are to meet the deadline and avoid late filing penalties. 17 February 2010
Pensioner tax code problems Pay As You Earn (PAYE) coding notices are now being issued to pensioners for the 2010/11 tax year. Whilst it is important every year to check your tax code, HMRC’s introduction of a new system has resulted in unexpected errors so you should take extra care. 6 February 2010
Tax credits, allowances and benefits not claimed In the hard times it is essential that those with the greatest need should claim what they are entitled to. LITRG has joined forces with a group of charities, led by Citizens Advice, to challenge the Government over £16 billion of unclaimed benefits – including tax credits. 4 February 2010
HMRC last minute support – not quite good enough It cannot have come as a surprise to HMRC that many people left filing their online Self Assessment return to the last weekend possible. But help for an inexperienced user was not as good as it should have been.People who found that help lacking, but are subsequently penalised, should consider challenging HMRC. 2 February 2010
Cold Weather Payments – do you qualify? With forecasts of more snow, some further people may be entitled to receive a “cold weather payment” from the Government. Are you entitled? And if you are, have you checked to see that you have actually received all the payments to which you are entitled? 2 February 2010
Tax and part time workers – the dangers Increasing numbers of people are taking part time work, sometimes out of choice and sometimes out of necessity. Part time employees need to understand the tax and tax credits issues which may confront them. 1 February 2010
Student loans – don’t repay too much Are you repaying a student loan and getting close to full repayment? If so, you might be able to use a new direct debit facility to avoid paying too much through PAYE (and then having to wait for a refund). 28 January 2010
Tax credits – fairness for claimants who report changes late From 18 January, tax credits recipients who start to live together, or who become single after being part of a couple, but are late reporting the change to HMRC, can reduce the overpayment on their old claim by whatever they would have been entitled to had they made a new claim promptly.This is something which we and many of our colleagues in the welfare rights world have been urging the Government to do for a number of years. 25 January 2010
Direct payments – don’t forget the tax issues (again) As the Government moves forward with plans to extend the system of direct payments, we urge the various Departments and other bodies involved to work together to ensure that tax issues are taken into consideration from the outset. 21 January 2010
LITRG challenge unfair rules on inheritance tax In 2008, the Government introduced a welcome inheritance tax relief. When a widow or widower (or bereaved civil partner) dies, their estate can benefit not only from their own tax-free band, but also so much of any tax-free band as remained unused when their late spouse or civil partner died. But quirks in some old rules mean this relief is not available to many where the earlier death occurred before March 1972. We have challenged this anomaly, but ministers have rejected our pleas. 20 January 2010
DWP leads the way on telephone costs The Department for Work and Pensions have announced that many calls made to their major helplines from mobile phones will now be at no cost to the customer.This is a very welcome and positive move and shows what can be achieved when a major government department is determined to improve customer service; we hope that HMRC will follow. 15 January 2010
Contacting HMRC - still a nightmare HMRC’s inability to deal efficiently with telephone callers is putting at risk not only its own reputation, but also the well-being of its low-income customers. This is the clear conclusion which can be drawn from a report published today by the National Audit Office. 15 January 2010
Tax to pay? Check HMRC’s bank details For taxpayers in self assessment, 31 January is a key deadline for filing tax returns and paying what you owe. When you pay up this year, make sure you check that you are using HMRC’s correct bank details, as these have changed. 14 January 2010
Pensioners and TaxHelp for Older People Many pensioners do not realise that they could be eligible for a free “tax health” check-up from TaxHelp for Older People (TOP). Around this time of year notices of coding will start to go out from HMRC for the 2010-11 tax year. Some pensioners who have a number of pension sources struggle to understand how different coding notices relate to each other. It may be time to give TOP a ring (and if you speak to Paddy Millard congratulate him on his MBE). 11 January 2010

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