Ha-hah, Mr Wilson, Ha-hah, Mr Heath

[caddyman]

I think that I may need to find some advice on pensions – particularly private pensions - and tax.

My mother, who is nearly 83 and not in the most robust of health as just received a letter (or at least a reminder for a previous letter, I suspect) from HMRC informing her that she underpaid her tax in 2009-10 and demanding something like £1,600 from her, which she plainly does not have. My sister will be taking that up with them separately.

We are not clear why she should suddenly owe them money. Her income is not quite fixed in that it goes up with inflation, but it is also not great; she gets, I think 2/3 of Dad’s work pension, plus a very small work pension in her own right. I don’t know how much that is, but it’s not a lot since her contributions over the years were comparatively low, despite working nearly all her life until the age of 60.

Anyway, the point is, she has never, to my knowledge had a tax demand from the Government before and certainly not since Dad died. She always assumed that tax was deducted at source, similar to PAYE and given the silence from the revenue these many years; it would have seemed she was right.

So have there been any changes in the way things are done, in the past couple of years? I don’t know and if anyone told Mum well… Frankly her ability to comprehend officialdom and its wiles in any form has declined markedly over the years and I know from trying (not entirely successfully) to help sort out the finances when Dad got ill, I know from first hand experience that the system does not make it easy for you to understand what’s going on, even if you don’t think you are in your dotage.

There is always something.

Comments

[bibliogirl.livejournal.com]

*snort* I've just had to get firm with HMRC about roughly the same thing, although obviously not pension-related. They sent me a letter this morning saying "you need to pay X now" and I called them to point out, quite firmly, that I did not stay in business this long by paying random demands and if they wanted money they needed to send me a statement justifying why they thought I owed them it.

Good luck.

[caffeine-fairy.livejournal.com]

Yeah, HMRC f*cked up bigtime some time in the last couple of years. We currently have members of staff with demands for £3K, £2.5K and £7K.

Best of luck to your mum.

[geekette8.livejournal.com]

Yes, there;s been quite a bit in the news about it. They've just got a new computer system and it's throwing up lots of cases where they didn't previously notice incorrect deductions.

There's stuff about dealing with it here:
http://www.thisismoney.co.uk/tax/income/article.html?in_article_id=514247&in_page_id=77
including a template letter:
http://www.thisismoney.co.uk/tax/article.html?in_article_id=513957&in_page_id=11

[caddyman.livejournal.com]

Many thanks; that's really helpful!

[fractalgeek.livejournal.com]

I suspect the issue is that, though pensioners have higher limits, they both adjusted when she was widowed, and the "at source" only works if they know about each other.

But they often get it wrong, even with the right information.

[ladkyis.livejournal.com]

it's because the computer operators are not operating the system in the way the programmers thought they should want it to be operated. The operators expect logic. The machines can only be logical and binary and the programmers are basically techno whizz kids who like to play games and only program puters for the money to buy more techno whizz kid stuff.

I know I am exaggerating a bit but it will be put down to computer error and we poor saps will have to pay even though they got it wrong

[velvet-the-cat.livejournal.com]

Yup. That's what I was going to say too.

It sounds like it's one of the batch of thousands of letters that have been sent out. The two most common problem areas are people with more than one job and pensioners with more than one pension.

At the very least, get HMRC to explain/justify their demands. Not all the claims have turned out to be valid as they're still making mistakes when they're supposedly correcting them. If they turn out to be valid then I think you can request time to pay it back, etc. £1600 underpayment for just one tax year sounds like a fair amount of dosh if her income's low though.

Good luck!

[november-girl.livejournal.com]

I believe that most (if not all) pensions companies keep a note of the tax code of the recipient of the annuity and deduct at source.