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Allocation problems
Even by the Taxman's own admission the self-assessment system had some serious problems at the outset. One of the worst was the way in which tax payments were allocated against tax bills. And despite various attempts to improve the system, it remains, in our view, woefully poor. According to reports from accountants we've spoken to, it's now clear that many people have paid interest and surcharges that aren't really due.
Timing issues
At the core of the problem is the Taxman's self-assessment computer which allocates payments on a "rolling account" principle like your energy bills; if there's a shortfall or overpayment in one period, it can be rolled forward to the next. This means that the tax you pay can be allocated against bills covering a number of years. It can cause payments to be diverted to tax liabilities that aren't due, while interest builds up on amounts that consequently appear overdue.
Do you need to worry?
The group most likely to be affected are those who have either been in arrears with their tax payments, or self-assessment return forms, at one time. But if you've ever paid interest or a surcharge then it's worth reviewing your statements of account to check whether you've been scammed by the Taxman's computer.
Where and when do you start?
Under current rules you can look back up to four years prior to the start of the current year.
Tip. Carry out your review before April 2013 and you can go back as far as 2008/9.
What to look out for
Our experience says that you should allow yourself plenty of time, not to mention some peace and quiet, to do the job. And don't be too hasty, you may think you've spotted a dubious interest charge only to find that a much later statement of account shows that HMRC have cancelled it anyway.
If steps 1 to 3 show up interest or a surcharge that hasn't been cancelled, and you've identified a mismatch in payments at step 4, then it's very likely the Taxman has got it wrong and you should submit a claim for repayment.
If you would like any further information, please don't hesitate to get in touch on 0191 386 4786 or email info@westwaters.com
How can we help?
We are a proactive firm of accountants who can assist you in all your financial needs in a friendly, efficient and professional manner.
Building partnerships, listening to your needs, and implementing a solid financial strategy is the backbone of our practice.
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