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There is no such thing as a good tax [Churchill]

21/05/2012

Spare a Monday morning thought for pub landlord Steve Wilson who, after filing his tax return online, got a shock when he was faced with a £2.6 million bill.

When he wired the Value Added Tax return for the King’s Head pub in Wells, Somerset, to Her Majesty’s Revenue & Customs (HMRC), he quickly – but not quite quickly enough – realised that he’d failed to put in a decimal point. He tried to log back into the Revenue’s computer system, but the damage was done.

Mr Wilson tried contacting the HMRC help-line by phone, but this turned out to be more difficult than he had hoped. ‘I use the term helpline in its loosest possible sense; a bit like a tentacle from a Man o’ War jellyfish would be a helpline if it were the only thing to grab while drowning.’

The taxman claimed that the mistake had been fixed, and that the correct amount would be taken from his account.

What had been, until then, a funny story then took a more worrying turn when Mr Wilson’s bank manager called. He told him that HMRC had tried to take the full £2.6 million from his account but, strangely, he didn’t have sufficient funds to meet the demand. He hit the phone to the (precious little) help-line again, but was told by an automated message that he could not amend online errors by phone. He would, instead, have to fill in a paper form and send it back to HMRC. It would then take the tax officer 15 working days to process, before they would get back to him.

However, the earliest a VAT return can be submitted is three weeks before the direct debit is due to be paid. If there is an error it takes HMRC at least three weeks to fix it.

Once Mr Wilson got through to a person at HMRC he was told that it was not possible to cancel the direct debit from their end and that it was, in fact, him who should have cancelled the direct debit authorisation with his bank. This left him facing the prospect of bank charges for a £2.6 million overdraft until HMRC could refund the difference.

Mr Wilson is now waiting to see what HMRC’s next move will be.

When asked to comment a spokesman for HMRC said, in a voice probably devoid of either character or empathy, ‘We apologise for any inconvenience caused. Customers are always given the opportunity to check their online return figures before submission. HMRC has robust security procedures in place to ensure that any information provided to us is genuine and correct, which can take a few days to confirm.  As a direct debit is a private arrangement between the customer and their bank, the customer must request its cancellation. HMRC has no legal power to do this.’

One man. One pub. One decimal point. One problem.

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