A Telegraph newspaper reader has written into the newspaper’s so-called Pensions Doctor, Charlene Young, from AJ Bell.
HMRC sending ‘out of blue’ letters demanding £1,279 payment within 30 days
A taxpayer has been left anxious after HMRC demanding a tax rebate back within 30 days – after paying it SIX YEARS go. A Telegraph newspaper reader has written into the newspaper’s so-called Pensions Doctor, Charlene Young, from AJ Bell.
They explained: “In 2020, I received a payment from LV= to rectify a miscalculation they had made some years previously regarding my pension pot. I had converted the pot into an annuity with another company some years previously.
“I was immediately given an emergency tax code and paid tax of £1,279.60 on the payment. My late husband, a former accountant, applied for a refund of this amount at the time but HMRC is now saying it wants the money back.
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“They wrote to me in March giving me 30 days to return the funds in full, nearly six years since the refund was paid. They say this is because the tax refund was not declared on my 2020-2021 tax return.
“Do I have to pay this or have they made a mistake? They are referring to this as a trivial lump sum payment when, in my view, the errors are anything but trivial.”
Charlene said the HMRC letter “out of the blue” which was “demanding money at 30 days’ notice after nearly six years” was “quite shocking.”
Ms Young explained: “HMRC said you were paid a “trivial lump sum payment”. While the wording is unfortunate, as it dismisses that it has resulted from an error that was in no way your fault, it is a defined term in the pension tax legislation.
“It allows a provider to pay out benefits to a former pension holder as a lump sum, where certain conditions are met.”
Ms Young explained the letters were part of the taxman’s “duty repaid in error refunded” or Drier process.
DRIER (Duty Repaid In Error Refunded) procedures refer to over-repayments that cannot be recovered through the taxpayer’s SA record and it is too late to cancel the repayment on the self assessment record because the repayment status is shown as ‘Issued’.
These procedures refer to all appropriate cases irrespective of whether the error resulting in the over-repayment was that of the taxpayer or HMRC.