How to write to the Tax Man – and survive

An interview with Susan Hayhoe

Welcome to this no-nonsense interview with a director of a leading SME-orientated firm of accountants in Milton Keynes, England.

How to write to the tax man and survive

Surely though, even Tax Men (and Women) are human?

Here we look at what spooks people when communicating with Her Majesty’s Revenue and Customs (HMRC) in the UK, why it does, why it shouldn’t, and why – if it becomes too much of an issue for you alone – working with a good, local accountancy firm can get you out of the doo-doo.

And the theory behind it all works for the Tax Man in almost every other country, too.

So … enjoy, and take note. Here are my questions in bold, and Susan’s answers in Italics…

Why is it that people find writing to the Tax Man so scary?

How to write to the tax man and survive

A brown envelope is scarier than a large spider…

I think people find writing to the tax man scary because they don’t understand what is expected of them.

We will often have clients turn up clutching envelopes from the tax office which they haven’t opened as they are worried what might be inside – it is usually very boring and nothing special, and we see 100’s of these letters.

But for an individual who doesn’t deal with the tax man every day, a brown envelope is scarier than a large spider!

What are the various issues the Tax People might write to us about?

The tax man writes to individuals and businesses about all sorts of issues. These can be:

  • PAYE coding notices
  • A notice to file a tax return
  • A reminder to file a tax return
  • A reminder to pay a tax bill
  • A penalty notice
  • A tax return check

How should we respond to those?

  • PAYE coding notices – nothing needs to be done by the employee, though it’s a good idea to check your employer has implemented the change on your next payslip
  • A notice to file a tax return – this notice is usually received in April / May and you have until 31st January the following year to file the return, or contact HMRC to advise your circumstances have changed
  • A reminder to file a tax return – as above but sent later in the year
  • A reminder to pay a tax bill – HMRC will often remind you of an amount owing, this can either be paid straight away, or make use of your bank’s facility to setup a payment in the future, and ensure you earn any interest and not HMRC
  • A penalty notice – HMRC issue a large number of penalties, the usual one are for late filing or late payment. It is always worth paying the penalty straight away to ensure interest doesn’t accrue, but you can appeal an HMRC penalty if you have a reasonable excuse, and it doesn’t hurt as HMRC make mistakes too!
  • A tax return check – HMRC randomly check a number of Tax Returns every year. Sometimes this is random and sometimes this is because the Revenue have noticed something appears to be missing. For example an employee might receive salary and a company car one year and in the next they will still be working for the same employer but won’t include a company car on their tax return – now this might be correct, maybe they handed the car back and instead get a car allowance, however maybe they’ve forgotten to include the car on their tax return

Surely though, even Tax Men (and Women) are human. To what extent can they show this when responding to people’s letters?

The tax office employs many different people and we have spoken to large number of them. Some have been incredibly helpful and very understanding, yes, even human.

But every office has that one employee, the real jobsworth, or robot, and these people work for the tax office too – thankfully only a few, but sadly some days that’s the person who answers your call or writes to you.

How to write to the tax man and survive

Every office has that one employee, the real jobsworth…

Thankfully with a phone call, sometimes a, er,  phone signal can be lost and you can call again and speak to someone else. However the Revenue does have rules, so even if the Revenue employee you speak to isn’t the most friendly and helpful, they still have rules and procedures they have to stick to – so be honest and helpful and hopefully they will be too.

For how long can we keep going with this correspondence before we should seek professional help?

All correspondence can be dealt with personally, however it is sometimes less stressful to seek professional help, as sometimes the correspondence can feel like a personal dig. Also if you are unsure what is being asked it can be quite stressful, and having somebody help can really take the pressure off.

How can a professional accountancy firm make a difference to our correspondence with the Tax People?

A professional accountancy firm can make a difference as they do the majority of the correspondence and will often only ask you a couple of questions before dealing with the correspondence and literally taking the matter out of your hands. Accountancy firms also have experience of talking with and writing to the Revenue which can makes things easier for you.

Why is it that a professional accountancy firm will do a better job of writing to the Tax Man than we can?

The accountancy firm isn’t you and therefore won’t take HMRC’s letters personally, but will instead be in a better place to respond. An accountancy firm should also understand any accounting jargon which an individual may not.

OK, you can handle the Tax Man better than I can. But what other justification is there for me to have a professional accountant?

A business can certainly run their own tax affairs, however as an accountant this is what we do everyday. I initially trained to become an accountant and continue my training by attending tax courses and other suitable lectures and courses. We also spend a lot of money on software to ensure our business has the best tools for the job.

An individual can certainly do the same thing we do, but while we know what to do, as we do it daily, you may spend hours, or even days researching and understanding how things are computed.

How to write to the tax man and survive

A mechanic would be able to complete this within a few hours…

For example, I am very good at following a step by step guide and am sure with the rights tools, a manual, google and YouTube I could service my own car – however a mechanic would be able to complete this within a few hours, without looking at a manual and google and personally my time can be better spent in my business.

In conclusion, what are the most important points to remember when corresponding with the Tax Man?

When corresponding with HMRC the most important points are:

  • Open any correspondence straight away – it may not be as scary as you think;
  • Read very carefully what HMRC are asking for and who they are asking – you personally or your company?
  • Read and answer each point separately
  • Be clear and concise with your answers
  • Be honest and if you are unsure, pick up the phone and ask
  • Make sure when you write you use the correct reference

What other advice can you give us about how to keep or tax and finance stuff in good order?

Dealing with finance and tax doesn’t have to be confusing. Staying on top of your paperwork and having a good system is massively important and will save you a lot of time. Depending on your business, it may be worth purchasing bookkeeping software.

There are a lot of bookkeeping products out there, and some are incredibly well priced so keeping your finances in good order doesn’t have to break the bank.

You’ll also find that by keeping your books well, you should considerably reduce your year-end costs, and enable your accounts to be prepared soon after your year end, giving you advance warning of any liabilities due.

And here are some more tips:

  • Keep your papers organised, you may need to produce old invoices
  • You need to keep papers for 7 years
  • If you are VAT registered, ensure you always ask for a VAT invoice
  • Don’t keep unnecessary papers
  • Going paperless can be really helpful depending on the number of papers you receive
  • Try to do your bookkeeping every day, otherwise it becomes a massive undertaking which will be pushed to the back of the to do list

Many thanks to Susan for her advice on how to write to and correspond with the Tax Man!

How to write to the tax man and survive

Susan Hayhoe

Susan Hayhoe is a director of leading Milton KeynesEngland, based Holmes Accountancy and Business AdvisorsSusan and her colleagues specialise in helping small to medium sized businesses manage their financial and tax affairs simply and without fuss. As they are a small business themselves, Holmes Accountancy people know just how it feels – and advise accordingly.

Questions about how to write better? Drop Suze a note on suze@suzanstmaur.com … Questions about UK accountancy and/or tax? Drop Susan a note on susan@holmesaccountancy.co.uk 

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