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17 January 2001
Replies to Queries – 3
Ignored authorisation
A client recently authorised a corporation tax repayment to be issued to us in settlement of an outstanding invoice. Despite writing and telephoning the Inspector several times to ensure we received the repayment, it was sent direct to the client.
As this is not the first time it has happened, we wonder what we can do. The Inland Revenue basically says that the Taxpayer's Charter does not extend to the agent. Is there any redress?
(Query T15,738) – David.
Ignored authorisation
A client recently authorised a corporation tax repayment to be issued to us in settlement of an outstanding invoice. Despite writing and telephoning the Inspector several times to ensure we received the repayment, it was sent direct to the client.
As this is not the first time it has happened, we wonder what we can do. The Inland Revenue basically says that the Taxpayer's Charter does not extend to the agent. Is there any redress?
(Query T15,738) – David.
Replies to Queries – 3
Ignored authorisation
A client recently authorised a corporation tax repayment to be issued to us in settlement of an outstanding invoice. Despite writing and telephoning the Inspector several times to ensure we received the repayment, it was sent direct to the client.
As this is not the first time it has happened, we wonder what we can do. The Inland Revenue basically says that the Taxpayer's Charter does not extend to the agent. Is there any redress?
(Query T15,738) – David.
A number of similar complaints prompted the Revenue to respond in its Tax Bulletin for August 1996 at page 343. It is asserted that the form of authority does not create an obligation from the Revenue to the agent.
It is said that the Revenue regrets its mistakes. There have been representations from the Institute of Chartered Accountants in England and Wales and the Revenue is doing what it can to eliminate errors of this kind but observes, unhelpfully, that taxpayers may cancel an authority at any time before repayment is made. The net outcome is that agents should be warned of the chancy nature of any such authority.
Does the Human Rights Act 1998 offer help? Section 3(1) provides that, so far as it is possible to do so, legislation must be read and given effect in a way which is compatible with the Convention rights, including those in Article 1 of the First Protocol (recorded in Schedule 1 to the Act). Hence every natural or legal person is entitled to the peaceful enjoyment of his possessions.
In some quarters it seems to have been supposed that the Act is restricted to the protection of individuals only, but the mention of a 'legal person' goes to show that 'David's' company client might have a right of recourse. Corporate tax claims are dealt with in Schedule 18 to the Finance Act 1998 (see paragraph 50(2)). – Bear.
The ignorance is indeed worrying. As this is evidently a general problem between 'David' and the Revenue, it is suggested he firstly arranges a meeting with his local tax district Inspector to ensure he has not somehow been placed on the Inland Revenue's blacklist of agents specifically prohibited from receiving taxpayers' monies for one reason or another (it does exist!).
Assuming there are no adverse reasons, it does seem strange that the mandate was overlooked despite repeated badgering by 'David'. But this would not be the first occasion of a harassed Revenue official obtaining retribution. In view of the normally thorough tax office checks in processing claims and the fact that a Revenue manual is dedicated to 'Claims', an explanation is warranted.
'David' seeks redress. I disagree that the Taxpayer's Charter does not apply to him or agents generally. If someone's business has been put to additional costs directly or indirectly through Revenue blunders, a claim for some consolatory payment should be made. Logically, one would expect the client to be billed for the additional time costs; the 'redress' effectively filters to the client – a positive counter argument to the Revenue's basic statement surely?
Hopefully, encashment of the cheque will lead to prompt settlement of the outstanding fees, but the downside might be that 'David' will form a long list of creditors, awaiting settlement. As a realistic cynic, I would question whether the client had withdrawn the mandate authority in this particular instance. Practitioners should take some comfort that, in this scenario, the Revenue must (under its internal guidelines) write to the nominee about the revocation – followed by a submission to Head Office (FICO) if the nominee objects within fourteen days (assuming procedures are not overlooked!).
It follows, who is the legal owner of the rebate, once mandated? A mandate is an authorised assignment which applies here. If there is little hope of recovering the fees, owing to the ignorance shown, then I would suggest 'David' go for the jugular. A simple letter, pointing out the oversight might lead to a 'stop' on the repayment order, in time followed by a fresh cheque to 'David'. If cashed, 'David' should point out that this is the Revenue's problem. The claim for the mandated refund should be pursued with advice to the Inspector that recovery of the original (effectively an over-repayment) should be requested by means of voluntary restitution, or from any other refund milling around, or likely to arise in the near future. This is not an unreasonable request if the client is a subcontractor facing tax deductions at source. If this falls on deaf ears, the Inspector should be asked to consider the little used legislation within Taxes Management Act 1970. Section 30(1) is quite specific:
'Where an amount of [income tax or capital gains tax] has been repaid to any person which ought not to have been repaid to him, that amount of tax may be assessed and recovered as if it were unpaid tax.' – Jim.
Ignored authorisation
A client recently authorised a corporation tax repayment to be issued to us in settlement of an outstanding invoice. Despite writing and telephoning the Inspector several times to ensure we received the repayment, it was sent direct to the client.
As this is not the first time it has happened, we wonder what we can do. The Inland Revenue basically says that the Taxpayer's Charter does not extend to the agent. Is there any redress?
(Query T15,738) – David.
A number of similar complaints prompted the Revenue to respond in its Tax Bulletin for August 1996 at page 343. It is asserted that the form of authority does not create an obligation from the Revenue to the agent.
It is said that the Revenue regrets its mistakes. There have been representations from the Institute of Chartered Accountants in England and Wales and the Revenue is doing what it can to eliminate errors of this kind but observes, unhelpfully, that taxpayers may cancel an authority at any time before repayment is made. The net outcome is that agents should be warned of the chancy nature of any such authority.
Does the Human Rights Act 1998 offer help? Section 3(1) provides that, so far as it is possible to do so, legislation must be read and given effect in a way which is compatible with the Convention rights, including those in Article 1 of the First Protocol (recorded in Schedule 1 to the Act). Hence every natural or legal person is entitled to the peaceful enjoyment of his possessions.
In some quarters it seems to have been supposed that the Act is restricted to the protection of individuals only, but the mention of a 'legal person' goes to show that 'David's' company client might have a right of recourse. Corporate tax claims are dealt with in Schedule 18 to the Finance Act 1998 (see paragraph 50(2)). – Bear.
The ignorance is indeed worrying. As this is evidently a general problem between 'David' and the Revenue, it is suggested he firstly arranges a meeting with his local tax district Inspector to ensure he has not somehow been placed on the Inland Revenue's blacklist of agents specifically prohibited from receiving taxpayers' monies for one reason or another (it does exist!).
Assuming there are no adverse reasons, it does seem strange that the mandate was overlooked despite repeated badgering by 'David'. But this would not be the first occasion of a harassed Revenue official obtaining retribution. In view of the normally thorough tax office checks in processing claims and the fact that a Revenue manual is dedicated to 'Claims', an explanation is warranted.
'David' seeks redress. I disagree that the Taxpayer's Charter does not apply to him or agents generally. If someone's business has been put to additional costs directly or indirectly through Revenue blunders, a claim for some consolatory payment should be made. Logically, one would expect the client to be billed for the additional time costs; the 'redress' effectively filters to the client – a positive counter argument to the Revenue's basic statement surely?
Hopefully, encashment of the cheque will lead to prompt settlement of the outstanding fees, but the downside might be that 'David' will form a long list of creditors, awaiting settlement. As a realistic cynic, I would question whether the client had withdrawn the mandate authority in this particular instance. Practitioners should take some comfort that, in this scenario, the Revenue must (under its internal guidelines) write to the nominee about the revocation – followed by a submission to Head Office (FICO) if the nominee objects within fourteen days (assuming procedures are not overlooked!).
It follows, who is the legal owner of the rebate, once mandated? A mandate is an authorised assignment which applies here. If there is little hope of recovering the fees, owing to the ignorance shown, then I would suggest 'David' go for the jugular. A simple letter, pointing out the oversight might lead to a 'stop' on the repayment order, in time followed by a fresh cheque to 'David'. If cashed, 'David' should point out that this is the Revenue's problem. The claim for the mandated refund should be pursued with advice to the Inspector that recovery of the original (effectively an over-repayment) should be requested by means of voluntary restitution, or from any other refund milling around, or likely to arise in the near future. This is not an unreasonable request if the client is a subcontractor facing tax deductions at source. If this falls on deaf ears, the Inspector should be asked to consider the little used legislation within Taxes Management Act 1970. Section 30(1) is quite specific:
'Where an amount of [income tax or capital gains tax] has been repaid to any person which ought not to have been repaid to him, that amount of tax may be assessed and recovered as if it were unpaid tax.' – Jim.
