2011

Paper notifications for vehicles brought into UK We welcome the HMRC announcement on 6 December 2011, that there will be a paper alternative to the mandatory online channel for notifying road vehicles entering the UK. At the same time we question why HMRC is to make it mandatory for VAT returns to be filed online, but rules out providing any paper alternative. 20 December 2011
LITRG welcomes new tax credits helpline For several years, LITRG have campaigned for HMRC to adopt a telephone policy that ensures their most vulnerable customers do not bear costs disproportionately. We therefore welcome HMRC’s announcement that the tax credits helpline will change to a 0345 number with immediate effect. We would like to see that policy extended to cover HMRC’s other helplines. 15 December 2011
LITRG welcomes extension of relief for cashing in small pensions LITRG has welcomed draft legislation published by HM Revenue and Customs (HMRC) which extends the relief for cashing in small pensions valued at up to £2,000 to personal pension schemes. 12 December 2011
‘Digital by default’ should not mean compulsion The Low Incomes Tax Reform Group (LITRG) has criticised HM Revenue and Customs (HMRC) for proposing to make it compulsory to file VAT returns online without any exceptions written into law. This follows the publication of draft legislation and HMRC’s response to a consultation in this area. 12 December 2011
Call for HMRC to do more for unrepresented taxpayers The Low Incomes Tax Reform Group (LITRG) has given a qualified welcome to HMRC’s response to the Tax Agent Strategy consultation, in so far as it affects those who offer their services free. 12 December 2011
Praise for HMRC approach to treatment of ‘incapacitated persons’ The Low Incomes Tax Reform Group (LITRG) has welcomed draft legislation published on 6 December 2011 by HM Revenue and Customs (HMRC) relating to the treatment of ‘incapacitated persons’ in tax legislation. 12 December 2011
Simplified PAYE schemes going, going, gone - soon! Draft regulations published by HM Revenue & Customs (HMRC) in November herald the phasing out of Simplified PAYE Deduction Schemes (SPDS) still used by some non-business employers. Whilst LITRG agrees that these no longer are the ‘simple’ option for PAYE calculations they once were, changing to the system used by all other employers may cause difficulties. We welcome the opportunity being offered by HMRC for all SPDS employers to give their views on how these changes will affect them. 12 December 2011
More tax credits cuts announced in the Autumn Statement In today’s Autumn Statement the Chancellor announced that tax credits would be cut yet again in real terms in 2012/13. While the basic tax allowance will rise next year by more than inflation, the reductions in tax credits will not compensate low-income families for any fall in their tax bill. And cutting taxes will deliver only limited help to those claiming means tested benefits. 29 November 2011
Child maintenance and use of HMRC data, continued... LITRG continues to keep an eye on child maintenance changes to the extent that proposals seek to use HMRC data for maintenance assessments. Commenting on draft regulations proposed by the Child Maintenance and Enforcement Commission (CMEC), we stress that clarity is needed as to what happens when HMRC data is considered unreliable. 22 November 2011
Businesses must not be forced to deal with HMRC online In response to two HMRC consultations, we have said that we welcome moves to encourage businesses to communicate with the Department online. But nobody must be forced to do so - particularly if they cannot, or would find it very difficult to, use a computer or the internet. 9 November 2011
Helping disabled people in work The Access to Work scheme is extremely valuable for those people who use it. New proposals should encourage more take-up and self-employment. However LITRG remain concerned about the lack of guidance on tax and related issues to recipients. 7 November 2011
The future postcode lottery for help with your Council Tax Many welfare benefits are to merge into a single benefit called ‘Universal Credit’ for working-age claimants, but Council Tax Benefit is excluded from the plan. Instead, the Government proposes that each Local Authority will organise its own scheme, within some basic guidelines. LITRG foresees increased complexity, a retrograde step in plans to ‘make work pay’ and increased costs as a result. 31 October 2011
PAYE underpayments for 2010/11 In the next few days, HMRC will start sending out the first PAYE calculations for 2010/11 where they think that people have not paid enough tax in the year. This will continue up to Christmas. We have updated our comprehensive guide to enable taxpayers to take action, check their calculations and, where appropriate, challenge HMRC figures. 28 October 2011
Tax simplification – dream or nightmare? The Office of Tax Simplification is going to examine over the next few months the scope for simplifying the tax system for pensioners. LITRG are contributing to this effort by lending one of our staff to them and by sitting on their consultative committee. This will not be an easy task and we thought the article reproduced below by the tax charity TaxHelp for Older People summed up the position rather well. 24 October 2011
The current PAYE “mess” – the facts Once again the Press have been having a go at HMRC about PAYE failures. As readers of this website will know, we are not slow in criticising HMRC when appropriate. But the current “mess” (PAYE repayments and overpayments) arises because HMRC have become more efficient rather than less so. 21 October 2011
Teachers, tutors and trainers – HMRC are after you HMRC have today launched another “tax on undeclared income” initiative. First it was those with offshore interests, then doctors and dentists, followed by plumbers. Now, the “Tax Catch Up Plan” is aimed at people who “coach or tutor” others, which covers a wide range of teachers, trainers and instructors. Like all the previous disclosure plans, HMRC have made it a very complex and dense process and people should not attempt to take up the offer without professional help. 10 October 2011
Proposals to restrict tax loss relief – the low income impacts We are critical of recent proposals by HMRC to restrict tax loss relief for all businesses in an attempt to counter high risk tax avoidance practised by only a few. 6 October 2011
NAO calls for better co-ordinated means testing The National Audit Office (NAO) recently published an important review of means testing. This focused on the design of means tested benefits considering their impacts and design and co-ordination between government departments. LITRG welcomes the NAO Report which confirms what LITRG has been saying for many years – that complexity overshadows sense. 30 September 2011
Filing a Paper Tax Return? Beware the new penalties system Paper Self-Assessment tax returns for 2010/11 have to reach HMRC by 31 October 2011, otherwise you risk being charged a late-filing penalty. Penalties are now more stringent and it is no longer possible to escape an immediate £100 fine if you file late; and further penalties will be charged automatically for each day you are late over three months. Here is a run-through of the new rules and also our regular reminders regarding paper filing. 30 September 2011
Should everyone get a tax agent? Part two HMRC’s ‘Tax Agent Strategy’ consultation proposes to give taxpayers’ agents direct access to their clients’ records held on HMRC systems, along with the facility to make adjustments. In response, LITRG warns that HMRC must ensure that unrepresented taxpayers are not left behind. 22 September 2011
Major changes need co-ordination Significant changes in the tax system are on the way – how to determine tax residence, the impacts of being ‘non-domiciled’ (potentially affecting up to 7million people living in the UK) and greater integration of income tax and National Insurance contributions – and all with greater reliance on computers. LITRG stresses the importance of co-ordinating change, not just within the tax system but also with welfare reform. 21 September 2011
HMRC service standards – a light at the end of the tunnel Over the last dozen years LITRG have criticised HMRC (and the Inland Revenue before them) about how inadequately they have recognised and measured what is important to the ordinary citizen in the delivery of their service. For the first time HMRC have openly acknowledged, at the very top level, that urgent change is required and that the professional tax bodies and charities such as LITRG are essential to contribute to the solutions. 14 September 2011
New VAT measure could breach Equality Act and European law In our response to the joint DVLA and HMRC consultation ‘Tackling VAT evasions on road vehicles brought into the UK’ we highlight the problems that low income individuals, particularly migrant workers coming into the UK, will experience in complying with the proposed new communication and timing procedures. 2 September 2011
Brave new digital world LITRG welcomes two new consultations on how HMRC intend to move forward in their provision of online services. But we remain concerned for those who are ‘digitally excluded’ and, even with HMRC’s support, will never be able to make the transition to an online ‘default’. 22 August 2011
HMRC get tough with plumbers By the end of this month all plumbers and members of associated trades need to have made their disclosures to HMRC and arranged settlement of liabilities. To emphasise their intent to pursue those who have not ‘owned up’, HMRC have now published details of arrests already made of plumbers who have not previously declared their income nor come forward under the terms of the Plumbers Tax Safe Plan (PTSP). 19 August 2011
HMRC’s handling of mental health in the modern world We are pleased that the HMRC consultation (prompted by LITRG), ‘Incapacitated person – a modern definition’, has stimulated a debate about how disabled people, including those with mental health difficulties, deal with the tax system. Now it is for HMRC and the Government to react accordingly, agreeing how to adjust both the law and HMRC’s practice. 15 August 2011
New HMRC Civil Disorder helpline for those affected by recent riots HM Revenue & Customs (HMRC) yesterday announced a single helpline number – 0845 366 1207 (see below for text relay details) – to help businesses and individuals adversely affected by the rioting and looting in England earlier this week. HMRC’s Civil Disorder helpline will be available from 8.00am to 8.00pm, seven days a week. 12 August 2011
HMRC make some amends for breach of equality law LITRG has been strongly critical of HMRC’s decision to implement a new policy, requiring tax credit claimants who failed security questions on the helpline to attend an interview at their nearest enquiry centre, without first assessing its impact on disadvantaged groups. Nearly two years on, HMRC have published their final action plan setting out their proposals to address concerns raised by LITRG and other representative bodies 6 August 2011
Treasury Committee backs LITRG concerns over access to tax advice Today the Treasury Sub-Committee of the House of Commons has endorsed a number of LITRG’s concerns about access to the tax system for unrepresented taxpayers. 29 July 2011
Delayed SA Statements – a sensible approach Are you due to pay Self Assessment tax by 31 July but haven’t received a statement? Don’t worry, say HMRC. If your statement only arrives in August, you should pay as soon as possible after receiving it, but you won’t be charged interest as long as you pay within 30 days of receipt. 26 July 2011
2010/11 Tax repayments – check your cheque! HMRC have announced that from mid-July they will start sending out PAYE tax calculations for the 2010/11 tax year, starting with repayments where HMRC think too much tax has been paid. LITRG’s advice if you receive a repayment is to make sure it is right (neither too much nor too little) and check whether you can claim anything else. 12 July 2011
More special deals from HMRC? LITRG reported earlier this year on a special tax deal for plumbers and members of associated trades to ‘own up’ to under-declared tax liabilities. HMRC have provided an update about this deal and outlined targets for future special deals. 7 July 2011
School’s out – 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. 5 July 2011
Legal Aid set to disappear for tax credits disputes The Government proposes to remove from the scope of legal aid all welfare benefits and tax credits advice. Who will help the poorest and most in need in difficult times? 30 June 2011
Should everyone get a tax agent? HMRC have started a consultation on the future relationship between the Department and tax agents – mainly paid agents, but also those acting pro bono and the extensive community of ‘friends and family’ representatives. 27 June 2011
HMRC complaints – a hidden path? Serious complaints about HMRC can be investigated by the Independent Police Complaints Commission. But how does anyone find out about this? And how does it fit with the other routes for pursuing a complaint about the Department? LITRG raises concerns in response to the IPCC’s consultation on new guidance for HMRC. 23 June 2011
Claiming tax credits? - HMRC issue warning about 'phishing' e mails HM Revenue & Customs (HMRC) is alerting taxpayers to a new surge of fake ‘phishing’ emails sent out by fraudsters in the run-up to the tax credits renewal deadline. Since the beginning of April, when the first tax credits renewals forms were sent out to claimants, more than 46,000 phishing emails have been reported by customers. During the same period of time HMRC helped shut down more than 150 scam websites. So what can you do to protect yourself? 21 June 2011
Leaving school, college or university? Young people trying to enter the world of work continue to face a difficult labour market. So what should you do when you start work to make sure you get your tax right and check whether you can get help via the tax credits system? 20 June 2011
Revenuebenefits.org.uk – Tell us what you think On 6 April, LITRG launched www.revenuebenefits.org.uk, a website to support advisers who have to grapple with the “giving” side of HMRC activity. The website was created with the support of HMRC and in partnership with Rightsnet and we will progressively add to its content in the coming months. To help us build on the initial success of the site, we would welcome feedback from users via an online survey. 15 June 2011
EU VAT proposals – the low-income view VAT is a particularly regressive tax, imposing the highest burdens on people with low, fixed incomes such as many pensioners and those living on state benefits. LITRG’s response to the European Commission’s consultation on VAT reform stresses that the impact of change on consumers and individuals running small businesses must be taken into account. 6 June 2011
Fraud prevention matters more than equality to HMRC LITRG has strongly criticised HMRC’s policy of requiring tax credit claimants to attend interviews at enquiry centres if they are unable to answer a series of security questions when telephoning the tax credits helpline. 2 June 2011
Consultation on offensive disability language After many years of trying, LITRG has succeeded in getting HMRC to address the question of archaic and offensive language in tax statutes. But we believe that the consultation which started this week should go wider, as it raises more fundamental questions about how disability is defined for tax purposes. 25 May 2011
Pay (your old tax bills) As You Earn HMRC plan to collect more and larger tax debts by getting employers to take them straight out of employees’ wages. LITRG is concerned that this could put low-income taxpayers into financial difficulty. 19 May 2011
Childcare vouchers in 2011/12 For the last few years we have been warning that if you were on a low or middling income and able to recoup most of your childcare costs through tax credits, it would usually be to your disadvantage to start receiving childcare vouchers from your employer in exchange for a reduction in salary. From 6 April 2011 the rules change so for some low-income people there may now be a small advantage in taking vouchers. If you accept vouchers, make sure that you understand what is going on. 28 April 2011
Tax return penalties – fear not (at least, not yet) Penalties for late self assessment tax returns are changing from 2010/11 – that is, those returns now being issued. But, fear not! The deadlines are not changing. You do still have until 31 October 2011 to submit a paper return, or 31 January 2012 if you file online. 27 April 2011
Think twice before leaving the tax credits system Within the next few weeks, some 1.8 million tax credits claimants will receive a letter from HMRC (designated TC1015). The letter will warn them that their claim will not be renewed this year, but will lapse from 6 April 2011, unless they contact HMRC by phone or letter within a specified time telling them that they want to renew for 2011/12. 21 April 2011
Problems for disabled people hiring support workers Access to Work is a funding programme to assist disabled people in a work environment. LITRG believes much more could be done by the Department for Work & Pensions to provide help and guidance in support of this programme. 15 April 2011
Business mileage – keep records to claim tax relief The Budget announced that, from 6 April 2011, one of the HMRC-approved rates for employers to reimburse employees’ business mileage would increase. But what if your employer doesn’t match those rates? Make sure you keep records of your mileage so that you can claim tax relief on the shortfall. 14 April 2011
LITRG launch a new website LITRG has wanted to do more to support advisers who have to grapple with the “giving” side of HMRC activity, in particular, tax credits and child benefit. So we are pleased to announce the launch of our new website - Revenuebenefits. This website has been created with the support of HMRC and in partnership with Rightsnet and we will progressively add to its content in the coming months. We welcome feedback. 8 April 2011
Child maintenance – how will using tax data work? The Child Maintenance and Other Payments Act 2008 heralded changes to child support, yet to come into effect. Further amendments to the law are now being sought, with detailed regulations expected later this year. But we have so far seen little to allay our fears that basing the new system on tax data obtained direct from HM Revenue and Customs will not be as foolproof as officials suggest. 7 April 2011
PAYE underpayments – is it time to pay? HMRC have been issuing P800 tax calculations to PAYE taxpayers – first for 2008/09 and 2009/10, then for 2007/08. Those who HMRC believe have underpaid tax are now being asked to pay the balance. We provide a guide below to your options and rights if you are being asked to pay direct to HMRC. 29 March 2011
Budget 2011 – some medicine to ease the pain If you are on a low and fixed income you are very much reliant upon government actions to help you improve your standard of living. In today’s Budget the Chancellor provided some help to those with the lowest incomes; but not perhaps as much as it seems at first glance. 23 March 2011
Tax underpayments included in 2011/12 coding notices HMRC have been sending out coding notices with “underpayment restrictions” included in them for the year 2011/12. These will attempt to collect tax which HMRC say has been underpaid for earlier years. In many cases, HMRC will not have explained to their customers the reasons for the underpayments or whether they should have been collected from someone else such as an employer or pension provider, or written off. This is unsatisfactory and should be challenged. We explain below what to do. 22 March 2011
Legal Aid should stay for tax credits In late 2010, the Ministry of Justice launched a consultation on reforming Legal Aid in England and Wales. In its response, LITRG has warned that the rights of low-income tax credits claimants could suffer if they can no longer obtain Legal Aid. 15 March 2011
Costs rise - HMRC-approved expenses rates do not When costs go up, some tax reliefs and exemptions increase along with them. But the mileage allowance which employees can claim against tax for using their cars on their employer’s business has remained static for many years. LITRG would like to see the level of all allowable expenses incurred by low income employees monitored and adjusted regularly to reflect the realities. 11 March 2011
Special tax deal for plumbers is far too complex Today the tax man made another of his special offers. If you are a plumber and your tax affairs are not quite right, now is the time to confess and receive a reduced penalty. But the process HMRC have created is so complex that, in our opinion, you would be wise to employ a professional tax adviser to explain it. So, it is not such a special offer after all. 1 March 2011
Untaxed state benefits? Challenge your tax calculation The Government recently announced that those starting to receive state pensions before 6 April 2009 who were not taxed correctly should not be pursued for any underpayment. The position remained unclear for claimants of other taxable state benefits. Having pressed HMRC, we now understand that their policy should be the same for these other benefits but individuals will need to contact HMRC asking them to write off the underpayment. 28 February 2011
Influential MPs question LITRG on HMRC performance There are some very dedicated officials working within HMRC. But from the perspective of unrepresented taxpayers on low and modest incomes (probably the majority), HMRC is now too often seen as an organisation that is unable to collect the right amount of tax, increasingly difficult to contact by phone, letter or in person, yet unforgiving of customer error and relentless in its pursuit of small debts. 15 February 2011
Is HMRC transparent? In common with other government departments, HM Revenue and Customs are charged with achieving greater transparency in order to deliver better value for money and enable the public to hold them to account. In response to HMRC’s draft plans, LITRG has called for less technical jargon, more detail and a commitment to ongoing review. 11 February 2011
Care and support – the future Enabling people with disabilities to live independently and decide on their own care and support structure is an important government policy. But in order to function efficiently, it is essential for government to consider the tax implications for people using individual budgets. LITRG has reinforced these points in response to a recent call for evidence on care and support strategy. 9 February 2011
Tax lessons for HMRC from the USA? Over the years HMRC have carried out numerous research projects to assess the needs of their customers. The missing ingredient after these reviews has been to take the feedback and make it a reality, particularly when it comes to communicating with customers in a way that they can understand. Have the USA approached this issue in a better way? 4 February 2011
Help with PAYE underpayments in 2007/08 When it was revealed last week that HMRC will now be sending out some 450,000 PAYE tax calculations showing underpaid tax for 2007/08, we promised to issue further guidance. This article expands on our earlier ‘P800’ material helping people to check and challenge their calculations, with specific pointers for 2007/08. 18 January 2011
PAYE – good news and bad news Today the Government announced that some 250,000 pensioners will not have to repay tax underpayments that accrued during 2008/09 and 2009/10 because the PAYE system failed to tax their state pensions correctly. This is very good news. Less welcome is the announcement that HMRC plan to send out some 450,000 underpayment notices for the year 2007/08. 11 January 2011
Telephone call charges – time for HMRC to act For several years LITRG has been campaigning for HMRC to adopt a telephone policy which does not involve the most vulnerable of their customers in disproportionate cost. Now the telephone regulator, Ofcom, looks set to force public sector bodies to adopt policies that give protection to the poorest. 4 January 2011

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