Chaos reigns as Revenue gets partners' tax wrong

LAW FIRM partners are receiving demands for tax they have already paid, while others are being credited with huge repayments not owed to them.

The chaos is due to the Inland Revenue's inability to deal with partnerships' tax returns as part of the mass of work created by the 31 January self-assessment deadline.

Partnerships can make a single tax payment on behalf of all partners against the self-assessment reference of one partner. This is then reallocated among the partners.

But Colin Ives, of accountants Smith & Williamson, says: "Some partners are being told they are due repayments of thousands of pounds, while others are receiving demands for payment from the Revenue," he says.

Ives says three firms he represents have contacted him about problems. Partners could be hit by these demands for some weeks to come, he claims.

Ives warns that partners thinking of claiming wrongly credited repayments should beware. "The Revenue may try to impose penal interest charges, plus a 5 per cent surcharge on any tax deemed not to have been held by the Revenue on 28 February."

However, a Revenue spokesman says: "We are not aware of any problem."