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Press ReleaseJanuary 2008: Taxman’s mistakes mean you could pay tax twice, warns UHY Wingfield SlaterHigher rate taxpayers should check they have not already paid tax on investment income before submitting a self-assessment return in January 2008 as HM Revenue and Customs (HMRC) is increasingly trying to collect tax early through PAYE. This is the warning from UHY Wingfield Slater, one of Sheffield’s leading independent accountants and business advisers and independent member of the national accountancy group, UHY Hacker Young. Taxpayers who do not pay close attention to how much they are being taxed through PAYE could end up paying tax twice if they subsequently pay tax instalments on their investment income. UHY Wingfield Slater says that the amount of tax that HMRC estimates taxpayers owe is often wildly inaccurate. According to UHY Wingfield Slater, around 75% of PAYE returns the UHY Hacker Young group has handled in recent months on behalf of higher rate taxpayers have included monthly deductions for investment income that would normally be recovered through self-assessment via the July 31 and January 31 instalments. In some cases HMRC has automatically tried to collect substantial estimated tax on property or interest income through PAYE when the actual amount owed by taxpayers at that time could be zero. Peter Newsam, tax partner at UHY Wingfield Slater, said: “HMRC is trying to collect tax early to improve its cash-flow without asking taxpayers first. It’s an incredibly underhand thing to do as most taxpayers would be better off paying tax on investments later via their self-assessment return. “What is particularly worrying is that HMRC’s assumptions about the amount of investment income taxpayers have are often wildly inaccurate. If taxpayers overpay tax through PAYE, they don’t get any interest from HMRC when it’s set-off. “The risk is that taxpayers may not notice deductions being made through PAYE and end up paying tax twice come January 31.” UHY Wingfield Slater says that HMRC is obtaining information about taxpayers from previous self-assessment returns, where information about buy-to-let income may be disclosed, or from P11Ds, where taxable benefits such as medical insurance or company cars are listed. Peter Newsam added: “On the PAYE forms we are seeing HMRC is automatically either restricting tax free allowances or moving taxpayers to a higher rate of collection. Having to get tax forms corrected creates extra work, the cost of which is borne by taxpayers and employers.” |
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