HMRC security checks delay tax refunds

HMRC is delaying the payment of self-assessment tax refunds and threatening to remove individuals from the self-assessment regime if extensive and onerous information is not provided, says accountants Hillier Hopkins

The accountants have seen a dramatic increase in letters from HMRC to clients demanding extensive documents and information that it calls ‘security procedures’ to make sure the ‘repayment amount claimed is correct’.

These security checks are, says Debbie Wilson, director and head of trusts and estates at Hillier Hopkins, unusual and worrying.

‘HMRC states in these letters that they are not an investigation into the self-assessment return itself but they could easily be misconstrued as one in the threatening language used and implications if an individual fails to respond within 30 days. Individuals face removal from the self-assessment regime and delays on receiving grants under the Self-Employment Income Support Scheme,’ said Wilson.

‘Whilst we totally understand HMRC’s need to prevent fraudulent reclaims, individuals expecting a tax refund are being hit with the suggestion that their tax affairs are questionable and deliberately wrong.’

Individuals are asked to complete form R38 that requires extensive information, together with proof of identity and address. HMRC has dismissed these letters as nothing more than a simple identity check, but its aggressive and threatening nature will be a concern for many taxpayers expecting a refund.

Wilson said: ‘HMRC has confirmed that these letters are triggered when unspecified “risk indicators suggest that the customer or claim may not be legitimate”. HMRC also recognises that these letters will arrive on doorsteps of individuals making entirely legitimate claims. They appear indiscriminate questioning tax refunds.

‘Despite the language used by HMRC, we would reassure individuals who receive such a letter not to panic or worry unduly. Whilst it might sound like a tax investigation, it isn’t. The letter should not, however, be ignored and you should ask your accountant or tax adviser for guidance on completing the required paperwork.’

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