As you would imagine, we deal directly with HM Revenue and Customs (HMRC) a lot. We often encounter the problems of working with HMRC and their systems, and the inconsistent information they regularly give out. We regularly tell clients that HMRC do not get it right every time. This is even to the extent that, if you speak to 3 different people at HMRC, you may get 3 different answers. However, a recent telephone conversation with them was truly unbelievable.
The reason we called was because a client had changed his company car during the 2014/15 tax year, but his tax code for 2015/16 (issued in January 2015) still showed his old car. We also complete the payroll for this client’s employer.
We mentioned to HMRC that our client had changed his car. They did not have a record of this. However, we had submitted the form to HMRC (called a P46(CAR)) in July 2014, and had confirmation of this in our software and even a successful submission email from HMRC.
OK, so HMRC didn’t have a record that our client had changed his car. They took his new car details down for their records. We then asked when his tax code would be updated. We were told that it had been updated in March 2015 following the submission of his P11D. This was particularly confusing for several reasons:
- According to his HMRC record, there was no new tax code issued in March 2015
- We have not yet submitted the P11D!
However, the details on his new code were spot on. The BIK deducted from his personal allowance related exactly to his new car.
So according to HMRC:
- We had not submitted a form which we had, the P46(CAR);
- We had submitted a form which we had not, the P11D.
After discussion in the office, the only logical explanation that could explain what had happened is that HMRC had in fact received the P46(CAR) form and used the information on that form to update our clients tax code in March. However, this either means that (a) HMRC’s system is (or can be) inherently wrong, or (b) the HMRC adviser we spoke to was completely misunderstanding what had happened.
All in all, it does not instil confidence in HMRC’s systems.
OK this sounds like a rant about HMRC, but it does raise some serious questions. We are in the position where we know what we have and haven’t submitted to HMRC, understand the forms and processes, and the implications. We are at the correct position, but (logically speaking) only by luck. What chance do non financial professionals stand? HMRC announced the death of the tax return in last month’s Budget, which is effectively encouraging more individuals to deal directly with them. This obviously assumes that their systems will be up to the job. The effect of this could be disastrous.
And it does beg the question, have you checked your tax code recently?