Reply to: A new twist in the HMRC P11D/expenses cockup

[barrydidit]

Savings income at higher rates is dividends. It happens a lot, and you just have to call HMRC and explain you file a tax return and it will be dealt with then - they do it all the time and it's infuriating as it's an absolute waste of my time correcting them every year. But that's HMRC for you!

Ah-ha! I've just received a "savings income at higher rate" deduction for about £6k now my return has been submitted. Never seen that before (or an adjustment for rental income for that matter) I'll give them a bell next week.... Thanks Claire

[TheCyclingProgrammer]

Why submit one if you have no BIK. Was there ever a case of HMRC issuing a penalty for no P11D etc where there is no BIK ?

No idea, but if you don't have a dispensation, then expense payments that aren't exempt such as business travel and telephone etc. are supposed to be reported on the P11D as they are strictly treated as taxable payments from YourCo. You have to claim relief through your self-assessment for no tax to be due.

So, as far as HMRC are concerned, the figure on Box N is liable to tax until you tell them otherwise when you fill out your SAR. It's silly, but those are the rules. As you can see from the above posts, I got a dispensation so I no longer need to put them on my P11D.

[Lumiere]

Why submit one if you have no BIK. Was there ever a case of HMRC issuing a penalty for no P11D etc where there is no BIK ?

[TheCyclingProgrammer]

They aren't making assumption based on the current year as they have no way of knowing the data, they are simply extrapolating from last year. Most people get more year on year, so they make an assumption.

Ah, thanks. That's quite an assumption to make, given I haven't paid any higher rate tax in the last 5 years of receiving dividends!

I imagine when I declare an extra large dividend at the beginning of the next tax year, which will result in about £7.5k in tax by my current calculations, that will really throw them (fortunately I won't have to deal with the fallout until early 2016, hopefully). It will also be a one-off, so I'll be reducing my payments on account to nil. Oh the joys I have to come...

[Clare@InTouch]

They aren't making assumption based on the current year as they have no way of knowing the data, they are simply extrapolating from last year. Most people get more year on year, so they make an assumption.

[TheCyclingProgrammer]

Savings income at higher rates is dividends. It happens a lot, and you just have to call HMRC and explain you file a tax return and it will be dealt with then - they do it all the time and it's infuriating as it's an absolute waste of my time correcting them every year. But that's HMRC for you!

I imagine it must be even more of a PITA for firms like you with lots of clients.

So they could have been making assumptions on the dividends I've already paid in the *current* tax year? If so, how would they know what dividends MyCo had paid in the 2013-14 tax year? Company accounts haven't been submitted for that year yet (2013-14 year ended this month for MyCo, so not due until October this year) and obviously I won't be submitting my tax return until at least April.

If they have got the figures from dividends submitted in a previous tax year, then they would have already received my tax return (2012-13 return submitted on 15 April 2013). Even if they could see what dividends I've taken, they'd know that I haven't paid enough to become a higher rate tax payer, which is what confused me.

[Clare@InTouch]

Savings income at higher rates is dividends. It happens a lot, and you just have to call HMRC and explain you file a tax return and it will be dealt with then - they do it all the time and it's infuriating as it's an absolute waste of my time correcting them every year. But that's HMRC for you!

[Jessica@WhiteFieldTax]

Argh, you'd think I'd had enough HMRC cockups for one tax year wouldn't you?

Having sorted out the P800 cockup and getting them to once again take my telephone expense payments off of my tax code, I got my tax code for 2014-15 back to 1000L.

Worth noting, before the current tax year started I had a coding notice that deducted the £20 for telephone expenses too which I rang up and got sorted, putting my tax code back to 944L for 2013-14.

Well this morning, I had yet *another* coding notice, this time for the current tax year, not only did it once again take the £20 off for telephone calls, but now they had reduced by tax code by £1175 for "savings income taxable at a higher rate"?!

So I rung HMRC up for an explanation; I haven't had any savings income of note, just my regular dividends. She said I must have ticked the box to collect dividends tax through my tax code...except, I explained, I don't owe any tax! All my dividends were taken up to the higher rate threshold and I have my self assessment for 2012-13 and HMRC's own tax calculation in front of me showing that there was no higher rate income.

She was very nice and reset my coding notice to 944L, taking off the "savings income" and "telephone expenses" once again, but she couldn't offer much more explanation as to where the figure had come from. She offered to put me through to the self assessment team but given how busy they probably are right now I didn't much fancy sitting on hold for an hour.

Has anybody had this issue or could possibly shed any light on why HMRC think I had savings income taxable at a higher rate at all?

Put simply its low grade staff in HMRC making assumptions in a few seconds, possibly computer prompted.

Put even more simply, its crap HMRC service (technical accounting terminology)

[TheCyclingProgrammer]

Argh, you'd think I'd had enough HMRC cockups for one tax year wouldn't you?

Having sorted out the P800 cockup and getting them to once again take my telephone expense payments off of my tax code, I got my tax code for 2014-15 back to 1000L.

Worth noting, before the current tax year started I had a coding notice that deducted the £20 for telephone expenses too which I rang up and got sorted, putting my tax code back to 944L for 2013-14.

Well this morning, I had yet *another* coding notice, this time for the current tax year, not only did it once again take the £20 off for telephone calls, but now they had reduced by tax code by £1175 for "savings income taxable at a higher rate"?!

So I rung HMRC up for an explanation; I haven't had any savings income of note, just my regular dividends. She said I must have ticked the box to collect dividends tax through my tax code...except, I explained, I don't owe any tax! All my dividends were taken up to the higher rate threshold and I have my self assessment for 2012-13 and HMRC's own tax calculation in front of me showing that there was no higher rate income.

She was very nice and reset my coding notice to 944L, taking off the "savings income" and "telephone expenses" once again, but she couldn't offer much more explanation as to where the figure had come from. She offered to put me through to the self assessment team but given how busy they probably are right now I didn't much fancy sitting on hold for an hour.

Has anybody had this issue or could possibly shed any light on why HMRC think I had savings income taxable at a higher rate at all?

[TheCyclingProgrammer]

FTFY. Btw, nil P11D can't be done online either, the system just doesn't have an option for it. Although I have got around that before by submitting £0 travel expenses.

I take it the dispensation doesn't stipulate that you use the HMRC scale rates? I always thought that it was part of the deal and as such is what has put me off applying. If you don't need to use the scale rates then it seems like a no-brainer to me.

No, nothing about scale rates, although I think you can select that as an option when applying - I assume this is what umbrellas use.

I selected the option that basically said I will only be reimbursing actual costs and the dispensation was approved on the basis that there is somebody independent to verify my claims or that I keep my receipts.

It did mention that the dispensation doesn't apply to AMAPs, which are exempt anyway up to the prescribed limits, or incidental overnight expenses, which are exempt up to £5 a night (or £10 if overseas).

Interesting about not having to submit a P11D at all if I have nothing to put on it...will have to look into that come April.

[Contreras]

In all likelihood I'll not be submitting a nil P11d from now on!

FTFY. Btw, nil P11D can't be done online either, the system just doesn't have an option for it. Although I have got around that before by submitting £0 travel expenses.

I take it the dispensation doesn't stipulate that you use the HMRC scale rates? I always thought that it was part of the deal and as such is what has put me off applying. If you don't need to use the scale rates then it seems like a no-brainer to me.

[TheCyclingProgrammer]

One last update...my dispensation got approved and the letter came through today, so it took less than a week! Approved for all business travel, subsistence and business calls.

In all likelihood I'll be submitting a nil P11d from now on!

[TheCyclingProgrammer]

They usually backdate to the start of the current tax year, although they can start it at the date you apply for it if they wish. As you're so close to the end of the tax year that may well be the case.

So in that case I'll still have one more P11D to fill out with my business travel to date? Damn.

[TheCyclingProgrammer]

Just had a call from HMRC confirming that the letter/P800 was issued in error and that it had been cancelled and that I definitely did not owe any tax, so at least that's that dealt with!

[Clare@InTouch]

OK, so I've applied for a dispensation for all business travel and phone calls. Lets see what happens. How long do dispensations normally take to come through, and will they apply for the current tax year or from the next one onwards?

They usually backdate to the start of the current tax year, although they can start it at the date you apply for it if they wish. As you're so close to the end of the tax year that may well be the case.