View the article online at http://citywire.co.uk/money/article/a871687
Tax return form error: HMRC may owe you money
More errors have been found in online government forms, this time with self-assessment tax returns.
Individuals who have filed self-assessment tax returns for 2013/14 may be due a refund after another technology glitch was discovered in the online forms.
Divorcing couples using the forms on the Ministry of Justice website have already been told they may have under or overpaid tax due to a software problem and now a new problem with online self-assessment returns has been uncovered at HM Revenue & Customs (HMRC).
George Bull, tax expert at RSM Baker Tilly, said errors with HMRC’s income tax self-assessment software ‘meant that a number of clients overpaid tax which we subsequently had to reclaim from HMRC on their behalf’.
When the return is e-filed, HMRC compares the tax figure using commercial software to the one calculated by their software and if they do not match the submission is rejected.
Bull said that in 2013/14, commercial software correctly performed the calculations but HMRC’s computers refused to accept the returns.
‘We were advised that the calculations were wrong and had to edit the returns to show the higher figure before HMRC would accept the returns,’ said Bull.
However, a year later in 2014/15 returns Bull said he was ‘confused to find that HMRC were now accepting returns prepared on the basis which had previously been rejected’.
‘It became apparent that HMRC had discovered they were wrong and corrected their computation, but had not told us,’ he said.
‘This means that a number of clients had overpaid 2013/14 tax because they had followed HMRC’s rules. We are now claiming back thousands of pounds of overpaid tax on behalf of those clients.’
This is not a problem isolated to one accountant or one type of commercial software used by accountants as all software has to comply with the HMRC standard.
‘If the standard set by HMRC is incorrect, all tax returns software will be wrong in that respect,’ said Bull. ‘This represents a fundamental gap in the quality control of the publication of online forms by the Ministry of Justice, by HMRC and potentially by other government departments.’
The errors in the forms are particularly worrying considering the push to e-filing by HMRC and other government departments.
Bull said individuals should not have their returns rejected even if they are not compatible with HMRC’s systems because ‘if the tax figure was subsequently found to be wrong, interest would be recoverable from the taxpayer’ so would not constitute a loss for the revenue.
‘So far, ad hoc work-arounds have been used. In the situation [Bull encountered] HMRC technical department eventually admitted the error and corrected its own software,’ he said.
‘As will readily be seen, where the error applier for more than one period, the earlier periods will have to be corrected by a resubmission or manual adjustment of the return. If the taxpayer does not know about the error in the tax calculation, he or she can’t make the correction.’
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