HM Revenue and Customs (HMRC) has been accused of resorting to “bully boy” tactics after sending out letters questioning savers as to why their “effective rate of tax” is lower than the national average.
HMRC is said to be using a “scatter gun approach” by sending blanket letters to taxpayers who have not done anything wrong.
Mike Down, of Baker Tilly, said instead of checking the self-assessment tax return, HMRC officials have been sending out spurious letters to whoever its computer systems identifies as a possible risk.
“Examples we have seen include an elderly widow who pays more than half of her income to charity thus attracting relief under the Gift Aid regime,” said Mr Down.
Charitable donations can be offset against tax, thus reducing a taxpayer’s overall rate. Mr Down also cited a case where someone with a minimum of two properties had sold one and declared – with full explanation on the face of his tax return – part of the capital gain as not qualifying for the main residence exemption.
How long you live in an additional home affects how much tax is owed. The otner had declared this but his tax paid was below the average, also triggering a letter.
“The Revenue is adopting a computer says yes approach, rather than simply checking the tax returns,” added Down.
“These bully boy tactics do not help anyone, instead they just scare innocent taxpayers.”
An HMRC spokesman said the letters are part of a trial to help individuals identify any mistakes they may have made on their self-assessment returns.
The spokesman also refuted suggestions that letters have been sent out in widespread fashion, estimating that only 1,000 letters have been distributed to date.
“We want to understand whether this approach will help individuals complete their self-assessment returns correctly,” added the spokesman.
“We are issuing 1,000 letters to customers with an income of £150,000 or more who have an effective rate of tax of 22pc or less.
“If a customer is content that their return is accurate then they do not need to do anything.”
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