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28th Mar 2024
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Revenue letters worry small firms

by The Editor at 10:19 09/09/06 (News)
Up to 14,000 taxpayers have had their tax arrangements questioned recently by HM Revenue & Customs (HMRC). The government has sent out 70 different kinds of 'intervention' letter, detailing common mistakes in tax filings that individuals may have made.
These letters are intended to resolve problems without opening costly enquiries, but have dismayed some, who have argued that HMRC should stick to established legal procedures.

An example letter provided by HMRC suggests that taxpayers look again at their arrangements and re-file returns. It says: 'I am not suggesting that you have made errors but I would like you to review your declarations made within the past 12 months and let me have, by (date), details of how any such (disposals/transactions) were dealt with together with confirmation that your declarations are correct; or a schedule of disposals/transactions, along with your revised figure for (tax type), in order that I can recalculate your tax liabilities'.

Some of the letters, directed taxpayers to HMRC manuals, which due to their complexity, are unlikely to be enlightening. An HMRC spokesman said the trials of such letters were 'small-scale' and 'entirely voluntary' and that 'In order to improve the way we work, we are trialing new, simpler and less time-consuming ways of helping our customers.'

Further muddle
Barry Roback, CEO of freelancer accountants, JSA Group, said: "Although we accept that the intention is to resolve problems without opening costly enquiries, we think that the likely result is further muddle, and more, rather than less, miscalculations.

"It would really be much better for HMRC to stick to established legal procedures rather than indulge in these rather vague fishing expeditions.

"To make matters worse, some of the letters direct taxpayers to HMRC manuals, which due to their complexity, are more likely to confuse than enlighten non-experts.

"If contractors received one of these letters, they should contact their professional adviser rather than try to deal with it themselves."

Related stories
For further information, see: Revenue letters target small businesses - Shout99, Aug 2006.

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Susie Hughes
The Editor © Hardhatter 2006

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