It is not widely known that the tax profession has a safety net available to people who critically need tax advice but are unable to pay for it.
There are millions of unrepresented taxpayers who struggle with a wide range of tax problems, and for some their tax difficulty creates very significant problems that can affect their livelihood, their health and their families. But they can’t afford to pay for the professional advice they so badly need.
How do the problems arise? Many don’t understand HMRC correspondence or how to fill in a tax return; and they don’t understand the multiple tax codes on their small pensions. Some are unnecessarily caught in Self-Assessment and suffer inappropriate penalties. Some have abusive employers causing inappropriate self-employment or under declarations and some have been subject to HMRC reviews or investigations. In extreme situations, some have suffered from abusive ‘accountants’, contractors or repayment factories.
Mick Mick was a self-employed HGV driver in an umbrella company type arrangement; he had already ceased working for them due to their unsatisfactory employment status. Tax was deducted from his pay but the company had not paid the deducted tax to HMRC or helped with his tax return as promised.
Mick struggled in presenting his situation to HMRC as it conflicted with information sent from the company: to add to the confusion he had sent all his documentation to HMRC which could no longer be located. At this stage he was being sent determinations for the estimated tax due and consequently was very distressed when he first approached us.
With his consent we used our ‘fast track’ phone line to HMRC to allow us access to the background information and helped him complete his outstanding tax returns, including the final, thus enabling the case to be closed.
The tax profession’s safety net is provided by our two tax advice charities: TaxAid (which focuses on people of working age) and Tax Help for Older People (which looks after the over 60s). Our role is to give tax advice to people who urgently need it but can’t afford to pay – sometimes we also act for the client in their dealings with HMRC.
Our two charities work closely together, for example handing cases to the other organisation when they are better supported there. Together our resources enable us to assist about 25,000 people a year.
In addition to having a serious tax problem, the people they serve are often suffering significant personal distress. Most of them are vulnerable and many are in crisis: a recent study of 7,000 of our clients showed that over 1,500 had mental illness, 1,500 lived with a disability or were terminally ill, 800 had severe learning disability and 700 needed help due to bereavement; and half of our clients are on incomes or pensions below the personal allowance.
Neil Despite being illiterate, Neil had been encouraged to set up as a self-employed handyman by his adviser at the Job Centre and came to us as he had not paid tax in three years. Job Centre advisers had taught him how to note down his takings over the years, but he encountered difficulty in completing his tax returns and had had them rejected each year, so he was at a loss to know what to do. He had also incurred significant late filing penalties.
Using his recorded figures, we helped him fill out his outstanding returns and successfully appealed against the penalties. Neil is one of a growing number of low-income self-employed people who will never be capable of completing tax returns without a professional adviser.
Our aim is to deal with the immediate problem our clients face, get them back on their feet and provide education so that they can handle their tax affairs in future. Resolving the problem may be achieved by giving them the advice and tools for self-help but for a small and growing proportion we act for the client, usually in their dealings with HMRC.
As well as resolving the tax problem, our work dramatically improves the well-being of our clients and for some, it is life changing.
Our charities, both founded by tax professionals, have helped vulnerable people for over 20 years. The need for our services has never been higher and it is increasing.
So, we have come together in the Bridge the Gap Campaign to raise awareness and support for our work; and to raise additional income so that we can meet the unfulfilled demand for our services from vulnerable people.
We will present a further article on our work and the people we help in the July issue of In Practice.
If you would like to know more please visit Bridge the Gap for more information and details of how to support more low income taxpayers like Mick and Neil with your donation.
Rosina Pullman and Graham Sherburn, CEOs of TaxAid and Tax Help for Older People, the two tax advice charities