The chairman of a probing parliamentary tax group is to demand that David Gauke, the exchequer secretary to the Treasury, launch an investigation into HM Revenue & Customs and its increasingly aggressive behaviour towards taxpayers it deems owe money.
Ian Liddell-Grainger, Tory chairman of the all-party parliamentary group on taxation, will demand urgent action after The Sunday Times discovered that HMRC is persisting in sending threatening letters to people — many of them pensioners — who have already made contact to dispute a bill or to ask for more time to pay.
Some of the letters threaten a visit to taxpayers’ homes to collect unpaid debts, even though HMRC would need a court order to do so. They state: “We are arranging a visit to your house. We will view your possessions and list those that we will sell at auction. We strongly advise you to avoid this as it will cost you much more to pay this way and can be embarrassing.”
Liddell-Grainger said: “The way HMRC deals with some people is simply not acceptable and its ‘front-of-house’ services are appalling. HMRC is threatening to use powers it doesn’t have and this is not right.”
Newly-retired pensioners, who are often entering the self-assessment system for the first time, are suffering particularly bad treatment.
This is demonstrated by the case of David Rolfe, 66, who lives near Southampton. The retired health and safety manager received notification from HMRC at the start of January that he needed to fill in a self- assessment form online for the first time as his pension income pushed him into a higher tax bracket. The deadline for online submissions is January 31.
Rolfe received three application numbers by post but could not operate the online system, so he rang his local tax office. He was offered a paper form, which he filed at the end of February with a covering note explaining he would be abroad until April 15 on a “once-in-a-lifetime” cruise to celebrate the retirement of his wife, Brenda, so could not reply to any correspondence until then.
He believed the matter had been settled, but arrived home to find a dozen letters from HMRC, one of which stated that the Revenue was “arranging a visit to his house” to recover £2,139 of underpaid tax, which included a £100 penalty for late filing of a self- assessment form, plus interest on the outstanding amount.
Rolfe said: “When I called HMRC again, all they could suggest was that I refer it to my accountant — but I don’t have one.
“I have since paid the bill in full, but as someone who was employed by the same company for 47 years, had tax taken via PAYE and never had any form of contact with HMRC in that time, I’d suggest their behaviour was heavy-handed.”
Huw Roberts, a chartered accountant from Cardiff, said: “While there is no question that taxpayers must pay what they owe, the Revenue has definitely got tougher on people with unpaid debts and threatening letters are being sent out earlier than in previous years.”
The Revenue said taxpayers who had previously owed no money would generally receive two reminders in the post before being sent a letter threatening to seize possessions. The menacing letter usually goes out initially to people who already have one or more unresolved debts, about which HMRC has already contacted them, as well as the new debt.
However, our readers’ cases show that even those who respond to initial letters are receiving further threatening ones.
Roberts said: “Once the system starts generating demands it can be very difficult to put a stop to them.”
Craig Stevens, another reader, from Winslow, Buckinghamshire, said his retired wife, Rosemary, was “terrorised” by HMRC. Like Rolfe, she also received a letter in January advising that she had to complete an online self-assessment return for the 2009-10 tax year. She submitted the form, only to be told she owed £350, which she disputed.
Stevens said: “After much difficulty, my wife managed to speak to a person in the tax office and was informed she could not appeal. This was followed by a series of letters containing threats. I have paid the amount demanded as my wife was very disturbed and upset at HMRC’s attitude.”
Meanwhile, Hywel Rees, an account manager from Kings-winford, West Midlands, noticed an anomaly when completing his tax return in January, which suggested that he still owed tax from the previous year. As he had completed a return that year — and paid all tax due — he phoned HMRC to check the details. He was told that there had been an error and he should ignore any amounts owing, which he did, even receiving a small rebate for overpaid tax.
However, in February, the 38-year-old received a letter apologising for previous misinformation but going on to state that he had, nevertheless, underpaid tax during 2008-09 to the tune of £580.
Rees said: “I called HMRC and was told there was nothing they could do and I should pay up as interest was running.
“I explained I was not working at the time so could not pay the bill immediately — they therefore suggested I write to their appeals department. I promptly did this, requesting that the interest was frozen and that I was given extra time to pay.”
Rees subsequently received a final reminder stating that unless he paid immediately, his debt would be passed to a debt collection service and that legal costs would be added to his bill. He reluctantly paid up — even though he has received no replies or acknowledgement of his appeals from HMRC.
He said: “While I cannot dispute that I have unknowingly owed tax because of HMRC’s miscalculations on my previous tax returns, I have made every effort to be honest and to submit my returns and pay my bills on time. I am angered and upset by the treatment I have suffered.”
Self-assessment taxpayers cannot officially appeal against tax demands as the liability is based on the payer’s own figures. However, Roberts said that someone who enters the system for the first time and disputes a bill should first contact the Revenue and ask for one month to sort out their affairs.
“This should be granted, although it may not stop further threatening letters being sent,” said Roberts. “The individual should also gather all paperwork for the relevant period. At this stage, professional help may be required to confirm the tax calculation is correct and arrange to submit the tax return if requested.”
There is useful information on the Low Incomes Tax Reform Group website at litrg.org.uk.
HMRC said that, in practice, it does not seek the right to enter people’s homes, and added: “The purpose of the letters is to prompt payment or contact from the debtors. They have proven highly effective.
“We receive millions of pieces of post a year and practically all are responded to very quickly, while some of the more complex queries may take a little longer. If we allow someone time to pay their debts then we will stop issuing further demands.”
If you are being persued for a debt you believe you do not owe contact Sleigh and Story on 01484 723783.
