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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.

Tax return form error: HMRC may owe you money

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.’

7 comments so far. Why not have your say?


Jan 05, 2016 at 17:43

What an unholy mess Dame Homer

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Alan Selwood

Jan 05, 2016 at 19:19

A scandalous situation.

I put it down to a combination of:

Getting rid of too many qualified HMRC staff 'to save money', so that there are not enough suitable staff to deal with the correct construction of and application of the system,

Relying on computer systems rather than experienced human beings to do the work,

Making the tax ever more ridiculously complicated than before, so that nobody except those with a degree in economics and mathematics has any real chance of understanding the system (and of course huge blame lies also at the door of politicians who feel obliged to tinker and complicate instead of simplifying).

The golden rule should be : "If a 10-year old understands it straight away, it's still too complicated".

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mark antrobus

Jan 05, 2016 at 22:00

I have a degree in Economics - but trust me - that does not help to understand the complexities of the tax system. Back in the day you could pop into your LOCAL tax office and be seen by a real human being with years of experience who could answer your query and help you you fill in your tax return form. This I know because my late father spent a career in the then Inland Revenue. I guess the system we have now is called progress.

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Jan 06, 2016 at 01:44

There can be little doubt that HMRC has spend a large fortune on software contracts.

The result is almost uniformly shoddy and creates a lot of entirely unnecessary work for the users, and particularly so for small users. The worst is that, when errors in the systems are discovered by users, there is no means of getting the errors corrected. Even the guys on the HMRC telephone helplines have no procedure for reporting any system errors that they recognise, and no route back to the system managers to get the systems corrected.

There is little hope of the situation getting better unless HMRC adopt a far more professional attitude to the specification, development, verification and testing of software, and provide adequate channels to enable users to report the problems that may be encountered with the software systems in service.

For those who have the misfortune to struggle through many forms of revenue software, for PAYE, for Corporation Tax, for end of year reporting, for VAT etc. there is an almost never ending chain of hurdles to pass.

To give just a few examples:

1) Input data fields that require whole pounds only, but also require a decimal place and fill with zeroes for pence. The fact that the software relies on whole pounds only, does not justify rejecting the entrance of pence as an error (even where the pence are not used).

2) When completing a balance sheet using the HMRC software, the software includes back checking cycles. With entries made to the nearest whole pound and figures rounded up or down to suit, the effect of the combined rounding can lead to a mismatch of one pound in the closing totals. The red error flag messages generated often persist even after the user has made the appropriate change. This can lead to a situation in which an inexperienced user is forced to track up and down the form adding or subtracting one pound until eventually, almost by chance, the balance is found and the red flag message is extinguished simultaneously. This is an unnecessary imposition on users that should be addressed by better software design.

3) An example of a lack of communication between the software developers, and the HMRC operators.

On completing an end of year report the form asked at one point how much was due, and at another how much had been paid. Well one year, due to a minor error in PAYE calculations the amounts due and the amounts paid were different. The conclusion being that there was therefore a small balance due to the HMRC. The report was submitted, and an acceptance e-mail was received from HMRC. This was then followed a few hours later; after the terminal had been shut-down; by a second E-mail rejecting the report.

Unfortunately this second, unexpected, e-mail was not spotted for some days.

Nor was the reason for rejection clear. The young lady on the telephone helpline explained that the report had been rejected because sums due and sums paid were not the same, and that the report could only be accepted if they were. I asked which figure she wanted and offered to amend the report accordingly, but she did not understand the distinction between 'paid' and 'due'!

I found out later that I was not alone in having my report rejected for this reason, and that there many others in the same position.

4) One of the worst failings of the HMRC software lies in the supporting information files. Following through on 'help' links can transform simple issues into morasses of unintelligible HMRC jargon. Not only that, but while some of the backup is revised so frequently that finding reference information relating even to recent periods is impossible, other areas of current advice address years long gone by as if they are points ahead in the distant future.

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Alan Selwood

Jan 07, 2016 at 00:33

I suggest that Pilgrim copies that response to the Chancellor of the Exchequer, his own MP and the head of HMRC insisting that all the points be sorted out satisfactorily by 31st January 2016, the same deadline as they give all the taxpayers to comply.

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colin overton

Jan 07, 2016 at 10:10

I have used to on-line tax return system and it's not perfect. However it does avoid form filling and the inevitable long wait on the phone to speak to someone. Also the calculation is almost immediate, even if the payment for a rebate seems to get slower every year.

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Stephen B.

Jan 09, 2016 at 10:30

I've used the online system for about 15 years and I think it's a lot better than the paper returns. However, the help information is often very poor - for example the information on how to declare dividends from overseas companies is almost completely opaque.

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