Working Together- Issue 2

 

Content

Editorial

Working Together is a joint initiative with the CIOT, ICAEW, ATT and ACCA. Although the material in this publication obviously reflects discussion and consultation with these bodies, the Revenue is solely responsible for its contents and for the views expressed in it.

Your Feedback

Many thanks to those of you who wrote or e-mailed us with feedback on our first edition. You gave us a very definite thumbs up; the vast majority of you welcomed the initiative and gave it your support. But there were also many constructive suggestions on how we might improve the bulletin - shorter, more direct language was what most of you wanted. In addition we received lots of information about Revenue systems and processes you felt weren't working properly, as well as ideas about how our and your services might be improved. We are working on all of these now with your representatives. In the meantime we hope that you'll see some immediate improvements in the style and content of this new style bulletin.

Most people who wrote will by now have received direct responses, either from our Working Together team here in the Revenue, or from our specialists. And some of you will see your questions logged on our register, others will see responses to their comments dealt with in the articles below.

A minority of you - genuinely a very small minority - felt that our last bulletin was just a Revenue public relations exercise and that there was likely to be little substance to it. To them we have said: please keep an open mind and watch this space. And to all of you: do please continue to send your comments to:

Working Together Team
Business Operations Division
5N South West Wing
Bush House
Strand
London
WC2B 4RD

or by e- mail to BOD.RMT.ir.bh@gtnet.gov.uk

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Payment of SA Liability

We have received a lot of questions about Self Assessment (SA) payments.

We can accept payment electronically by Internet or telephone banking. We can also accept payment by debit card. Taxpayers who have a Switch, Solo or Visa Delta debit card can pay their SA tax by telephoning 0845 305 1000 between 8.00 a. m. and 10.00 p. m.

Payment can also be made by Bank Giro or at the Post Office. Where payment is made by other than electronic means it is very important that your client's payslip accompanies the payment. The encoded personalised details on the payslip issued with the taxpayer statement and the agent statement ensure that the payment is allocated quickly to the right account.

Where payment is made by post, please send it with your client's personalised payslip to the Accounts Office in the coded envelope we send your client. Do not leave payment so late that it has to be made to the local office. Paying direct to the Accounts Office will ensure your client's account is updated quickly.

Where you post a payment please don't:

  • enclose a compliment slip or a courtesy letter. (You only need to send us a letter if it contains an essential message about your client's account.)
  • staple or attach paperclips to cheques and payslips.
  • use photocopies of payslips. (If you need a payslip the Tax Office can supply one.)
  • Use a payslip which was issued for one client, to pay the tax of another. (The payment will be allocated to the taxpayer whose personalised details appear on the payslip code line.)
  • request a receipt - payment details will appear on the next statement we issue.

Our aim is to process all cheques on the day of receipt so that your client's record is updated the following day. The automated equipment which opens, sorts and processes cheque payments is most efficient when handling individual cheques each accompanied by a personalised payslip. And that is where you can help by ensuring that postal payments reach the Accounts Office without any additional material in the envelope.

If you do not use a correct payslip, or you attach a staple or paperclip, or you enclose a letter or include a compliments slip we have to deal with your payment manually. This delays processing and increases the potential for error.

Where payments are sent to the Accounts Office it is best to have a single cheque for each payslip. However if you decide to send a composite payment for more than one client on a single cheque, please ensure there is a separate personalised payslip for each taxpayer and not a paper schedule. Where the composite payment is for a partnership, please let us know how the payment should be split between the partners. And please check carefully that the individual amounts for each taxpayer add up to the total of the cheque. A surprisingly large number don't! If the cheque and payslip amounts do not agree this delays the updating of the records for all the taxpayers involved. Where exceptionally you do not hold a personalised payslip for your client, please ensure that the correct reference is entered on the substitute payslip.

The Accounts Offices in Cumbernauld and Shipley will be opening their doors to accountants and agents later this year. This will give visitors a chance to see some of this at first hand. And it will help us, and we hope help you, to improve the payment services we provide for your clients. This builds on a successful event in Shipley last year attended by 65 firms as well as a number of journalists.

If you are interested in attending the Open Days at Cumbernauld on 14 and 15 September 2000 - contact Willie Wilson on 01236 783216.

If you are interested in attending the Open Days at Shipley on 16 and 17 November 2000 - contact Laura Campbell or Carole Carter on 01274 539636.

Effective dates for payment

The rules, which apply to all payments of Income Tax, Corporation Tax, Capital Gains Tax and NICs are set out on page 3. The Effective Date of payment is the date on which a payment is credited for the purpose of calculating interest.

Payment Method Effective date of payment
Cheques, Cash, Postal Orders The day the Inland Revenue receives the payment
Exceptions  
Where payment is received by post following a day when the office has been closed, for whatever reason, including a weekend. The day that the office was first closed.
Electronic Funds Transfer  
CHAPS
(same day transfer)
 One day prior to receipt by Inland Revenue
BACS
(transfer over two days)
 One day prior to receipt by Inland Revenue
Bank Giro

The date on which payment was made at the bank
Girobank The date on which payment was made at the Post Office

If you have any problem or an enquiry about making payment please telephone the Accounts Office. The telephone number is shown on the front of the statement.

There is more information about making payment on the Inland Revenue website www.inlandrevenue.gov.uk.

Please note that any query about the liability on the statement should be taken up with the relevant Tax Office.

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Our "Attitude" To Debt

Our first Working Together postbag generated a fair amount of comment about the Revenue's new approach to debt collection, the gist of which was what you saw as the Revenue's new `tougher' approach to collection matters, which appeared at odds with the principles underpinning Working Together. Some of you may also have seen some recent coverage suggesting that we have adopted a new `hard line' or `zero tolerance' approach to the collection of overdue tax.

None of this is true. What we have been doing, as many of you know, is working hard over the last couple of years to modernise our debt management systems and practices.

We have recently created a new telephone unit and small and medium sized employers who are late with their PAYE may have noticed already that we have been making earlier, and more consistent, contact with them than in the past. Some of our past inconsistencies involved accepting, on a regular basis, late payment when clearly we shouldn't have done so. On Income Tax Self Assessment too, earlier contact is also being made, again increasingly by telephone. And at the same time we are modernising some of our internal processes, and reviewing everything we do. This includes how we deal with time to pay requests, for example, to ensure that these are handled consistently by all offices to the same high standard; and we are also placing much greater emphasis on helping taxpayers to comply for the future. However, if you are unhappy with anything we have done, please let us know by raising the matter with the office manager.

So there have certainly been lots of changes: we are definitely speeding up our actions where payments or returns are overdue; we are definitely trying to be more professional and we hope more effective when we make contact. But we remain strongly committed to help people who need and merit help, especially new businesses and people with temporary problems who have an otherwise good track record with us. Obviously, for these people the sooner we make contact with them the sooner we can help them - though it's obviously so much better if they contact us before a payment is due if they are going to have trouble making it.

However for the small minority of people who are consistently late with payments, or who have previously made but broken their promises, or who are trying to play the system, we will of course take firm action. It is only fair to the vast majority of customers who do pay on time that we do so.

Later in the summer, and as part of Working Together, we'll be holding a workshop with your representatives and others to discuss our policies and practices. We'll be looking for example at the role of agents when returns or payments are overdue, and at some of our standard letters. We'll report on the outcome in a future edition of Working Together. But in the meantime please don't confuse earlier contact with the adoption of an across the board hard-line approach; we haven't adopted one and we don't intend to!

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Delays In Processing 1999/2000 SA Returns

As we expect most of you know we have encountered some computer problems, and significant delays, in processing 1999/ 2000 tax returns.

We are very sorry about this. A number of factors have contributed to this situation, including the announcement in November 1999 of the extension of the 10% rate to savings income. We are pleased to say that since the end of May our offices have been able to process the majority of returns. And as we write this we have already made very significant inroads into the backlog that built up - nearly half a million returns have already been processed.

Where they can identify them our offices are already giving priority to repayment cases and by the time you read this we hope there will no longer be a problem. However it makes sense to repeat here the message we have already given out: if you or your client are waiting for a refund please let us know and we'll do our best to process the return and the repayment quickly. It isn't necessary to demonstrate hardship or provide any other justification for your request all our offices need to know is that you think a repayment might be due and you would like it quickly.

We do still have some problems to fix before everything is working as it should and we can process all returns in all offices. But there are only a few remaining exceptions and we hope that we will be able to deal with those too very soon. In the meantime our offices can still deal with these exception cases manually.

Again we can only say sorry.

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Capital Gains Schedules On Self Assessment Returns

We will now accept schedules which mimic the capital gains pages of the income tax return instead of insisting on the completion of the pages themselves.

We are not looking for a precise copy. But as the notes on Capital Gains point out we will accept computer generated schedules to replace Page CG1, or Pages CG2 and CG3 (together with Pages CG4 to CG6 as appropriate), provided they follow the form of the paper version of these pages.

We have begun discussions with financial software developers aimed at making it easier for taxpayers to provide the required information in a form which reconciles with the Self Assessment Return.

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Coming Improvements

Claims to reduce
At the moment where a return includes a claim to reduce a payment on account we know that the entry in Box 18.7 is often missed, particularly at peak processing times; or alternatively the entry is identified but the work which then needs to be done isn't done promptly enough. We are therefore changing our computer system - we hope by early December - so that it can handle these claims automatically. Thanks to all of you who have written to us about this and apologies to everyone who has been affected by previous errors or delays.

Carry-backs
From April 2001 we also hope to deal with `carry-back' (Schedule 1B) claims automatically. Carry-back claims can affect two or more tax years. They include pension relief carry back; loss relief carry back; farmer's averaging; literary and artistic spreading and post-cessation receipts. At the moment all of these claims have to be dealt with clerically after the return data has been captured on the computer system, which again has been a source of errors and delays.

New Look for Statements
From last month SA Statements of Account have had a different look.

The layout of the form has been revised to make the amount to pay clearer and to improve the presentation of the statement. In addition, the final summary column now adds up to the amount to pay, so taxpayers will find it easier to see where all the figures come from.

The June statements will, for the first time, be produced using a new piece of software called Dynamic Data Composition (DDC). We hope this software will enable us to make changes to our forms more quickly than by using traditional methods and make us more responsive to new requirements. The SA statement is the first of many forms we anticipate using DDC on, and intend to extend its use in the coming months to the Tax Calculation.

Statements of Account - Agents' details
In response to your requests we have decided to revise the timing of the biannual issue of the `Self Assessment Statement of Account Agent Details'. Our aim is to ensure that statement information and payslips reach you in plenty of time before the payment due dates. You may have received the first issue already; if not it will be with you shortly. The second should reach you around mid-December 2000.

Some agent statements for December will be issued slightly earlier than taxpayer statements. Generally the information on both should be well aligned but there may be some cases where taxpayers have fuller information than you do. On the plus side however you will now receive the information earlier and we hope this will make things a little easier for you.

Your Own Details

Some of you have been receiving more than one copy of Tax Bulletin Special Editions as well as SA guides and statements. This happens because our computer systems hold slightly different versions of your business name and address but cannot automatically consolidate these.

We are very sorry if this has inconvenienced you. Apart from anything else we realise that it is wasteful. So if you have been affected please contact your local tax office and we'll be happy to correct our records. Similarly, if we get your clients' references wrong - for example by failing to recognise a partnership change - please tell us straightaway.

Self Assessment Tax Calculation Guide

We have discovered an error in the section of the Tax Calculation Guide which helps taxpayers to decide whether payments on account are required for 2000/ 2001. The error is at Stage 12, page 24.

When calculating whether 80% of tax has been paid at source, box C12.13 should also include dividend tax credits from boxes C11.42 & C11.57. This will only affect taxpayers who receive dividend income which carries a tax credit and where this tax credit pushes the tax paid at source to over 80% of the tax bill for 1999/ 2000.

Our staff involved in capturing returns have been alerted to the problem and will correct any case identified during processing. The computer system will also be changed in November 2000 and any returns processed after that date will only generate payments on account where appropriate.

The Tax Calculation Guide will be corrected for next year. We are looking to develop a shorter version of the Guide for 2000/ 2001 and will be consulting both internally and externally with our Working Together partners very soon. In the meantime we are sorry if you have been affected by this.

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Self Assessment Tax Returns - Amending Provisional Figures

Some of you have asked us to explain the relationship between provisional entries in returns and the SA enquiry window.

First of all here is a reminder of our position on provisional entries. The time limits for filing returns are such that we think it is reasonable to expect the vast majority of taxpayers to be able to file on time. We recognise however that exceptionally this may not always be possible. Our policy is set out on page 27 of the main tax return guide, and there is further guidance on page SEN3 of the Self Employment pages.

We will accept as `filed' a return containing provisional figures where:

  • there is a tick in Box 22.3 of the return, and
  • there is an explanation in the Additional Information Box on page 8 of the return of the reasons for the delay in obtaining the information. (We will not accept pressure of work either on the taxpayer or the advisor, or the complexity of the taxpayer's affairs, as valid reasons.), and
  • the explanation provides the date on which the final figure is expected to be available.

A correction to a provisional figure will normally constitute an amendment to the return. The taxpayer has 12 months from the filing date in which to make that amendment. Where a return has included provisional figures, the taxpayer has to give us the final figures as soon as they are known. Most of the time you will be making an amendment to the self assessment at the same time as you inform us of the final figures. We normally expect this to be well before the deadline for amendments. Remember that a penalty can be charged because of Section 97 Taxes Management Act 1970 (TMA 70) for unreasonable delay in cases where additional tax is due.

Our people will consider opening an enquiry in cases where provisional figures have not been replaced before the enquiry “window” closes. But we are not required to do so and you certainly shouldn't assume that we will be able to do so on every case, or that we would want to.

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Self Assessment Enquiries - New Opening Letters

In our last edition we told you about the review we are conducting of SA enquiries. This is looking at all the rules, processes and procedures around enquiries to see whether and how they can be improved. In the meantime, and following consultation, we have rewritten some of our standard letters to make them easier to understand and less intimidating. We started to bring the new text into use at the end of June so you may already have seen the new wording.

The notices which we have changed are those which tell income tax ITSA taxpayers that we are opening an enquiry into their return (Section 9A TMA 70) or have completed our enquiries (S28A and S28B TMA 70). We hope you find them a big improvement.

The notices for Corporation Tax enquiries are also being looked at - more news on this in a future edition.

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Faster Working

Many of you have asked about Faster Working - the scheme under which agents and inspectors can agree in advance an outline plan for the faster working of Self Assessment enquiries.

Since the scheme was first launched the average duration of enquiries into business taxpayers' returns has fallen quite markedly, down from about 19 months before Self Assessment to something closer to 11 months now. As a consequence the case for a separate `fast track' regime has become less strong than it was, and take up of the scheme has for the most part been low.

We are looking at Faster Working again as part of our joint review, with CIOT, of SA enquiries. In the meantime, and because enquiries are now being completed much more quickly, we think there is no longer any need for us to offer Faster Working routinely at the beginning of every enquiry. However the scheme is still available and if you or your client would like to agree a timetable for the enquiry with the inspector, do please ask.

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Self Assessment Enquiries - Deceaseds' Estates/Cessation Of Trusts

We have received a number of questions about whether it would be possible to speed up certainty on deceased cases.

In fact there is already a fast track procedure. To help Personal Representatives settle the affairs of the deceased as quickly as possible, we will, on request, issue an SA return before the end of the tax year where a trust or Estate is being wound up, and where appropriate we will give early written confirmation if it is clear that we do not intend making any SA enquiry.

Full details were contained in Press Release 66 of 1996.

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National Minimum Wage

In edition 1 we promised to let you have more information about the position of company directors.

The joint guidance prepared by the ICAEW and the DTI is still under discussion but we hope we'll be able to let you have final details of the outcome in our next Working Together.

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Copy Coding Notices To Agents

Many of you are asking why you cannot automatically be sent copies of your clients' Coding Notices. At the moment, our computer system cannot do this but there is no doubt it would be a very useful enhancement, particularly to assist in the completion of SA returns.

Our current guidance to network offices is that, where possible, requests should be met by the issue of handwritten copies but this is of course not practical for Coding Notices issued as part of the bulk annual and Budget runs.

So what are we doing to address the problem? Well, we are looking at replacing our current PAYE computer system with a new one and the issue of copy Coding Notices is a strong contender for inclusion in this project, but not before 2002 at the earliest.

Meanwhile, the Coding Notice itself and the accompanying booklet P3 both contain a reminder that the Notice should be passed on to any agent acting. We realise this is a poor substitute but it is the best we can do at the moment.

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Authorising Your Agent - Form 64-8

Our first edition included an article about our new form 64-8, Authorising your Agent. Some of you have said that you would have liked more information about our reasons for making the changes, and clarification about when a new 64-8 needs to be completed.

The old-style form gave us authority to deal with you only in relation to tax and Class 4 NICs. The new form provides authority for us to deal with you in relation “any matters within the responsibility of the Inland Revenue”. It is a universal authority which covers all of the Revenue's existing (and future) work, including National Minimum Wage, Tax Credits, and other National Insurance matters.

You will have to complete a new style 64-8 only if:

  • you hold an old-style authority but you need to contact the Revenue's National Insurance Contributions Office or Tax Credits Office or
  • you want information from any of our offices about NICs (other than Class 4) or tax credits, or
  • you have been newly appointed, or
  • exceptionally, it is apparent that no formal authority already exists.

We only need one form from you; we will make sure that the authority is shared with all the Revenue offices that you need to deal with. But it is important to note that you are not required to use this form. You can provide written consent by letter if you wish.

More information on the background to these changes is included in an article on our website: www.inlandrevenue.gov.uk

You can obtain the new 64-8 from:

The form is now easily accessible on our website because of your comments following edition 1.

Form CWF1 - Notification of Self Employment
Prompted by the item on the new 64-8 in our first edition a number of you have asked if we could amend the CWF-1, the notification of self employment, to build in a ready-made agent authorisation. In fact last year, when we were working on the new 64-8, we looked with Customs & Excise at the scope for creating a combined authority based on elements of both forms. In the end we concluded that this wasn't practicable, the main reason being that Customs & Excise required significantly different types of authorisation depending on the nature of the tax or duty being dealt with. We decided in the end that it was probably best to retain separate CWF1 and 64-8 forms for the time being. However, following your comments we'll keep that decision under review. Many thanks to everyone who wrote.

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Register Of Issues

Our Register has turned out to be rather too long to publish in full here so we have decided to publish it in full on our IR website at www.inlandrevenue. gov. uk. If you would like a paper copy please write to the address on the cover. We have also agreed with our Working Together partners to devote most of our next edition to reporting back on issues which have now been resolved or settled.

The open points which we have not yet reported on in Working Together reflect a wide range of issues, but include:

Self Assessment

  • treatment of small underpayments
  • wording of forms
  • Electronic Lodgement Service
  • Filing by Internet & discounts
  • Enquiries - a range of issues covering all aspects of the enquiry regime; these are being addressed by our joint review
  • Trusts and tax returns

NICs

  • Pension forecasts
  • Class 2 payslips

Capital Gains

  • Design of CG return pages
  • Valuations
  • Obtaining specialist advice
  • Retirement Relief and the need for valuations to be agreed

Corporation Tax

  • Clubs and Unincorporated Associations - the need for returns
  • Treatment of companies in liquidation
  • Operation of quarterly instalments regime

PAYE

  • Taxation of small benefits
  • P14s, P35s and reminders
  • Mileage rates
  • Coding out underpayments

Other

  • Availability of IR forms
  • Use of form R40
  • Use of form 575
  • Business motoring record keeping

Copyright

Working Together is covered by Crown Copyright. There is no objection to firms copying the publication for their own use. Anyone wishing to republish Working Together or extracts more widely should write for permission to Isobel McKenzie, Working Together Team, 5N South West Wing, Bush House, Strand, London, WC2B 4th

© Crown Copyright July 2000

 

 
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