There are some curious typos in a HMRC Income from Property information request letter which is combined with an evident misunderstanding of HMRC's powers. Upon closer inspection, it looks suspiciously like the work of ChatGPT, or is it just human error?
One of the letters used as a follow-up to HMRC's property-letting campaign reads as follows:
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"Dear XXXX Income from letting property Thank you for your letter of [date]. We now need some more information from you to check if you need to pay any extra tax. Information we need Section S36 (1a) (b) of TMA 1970 allows us to conduct a compliance check going back 20 years from the current tax year..." |
Spot the errors!
What exactly is wrong?
'Section S36' - looks a bit odd, it is either Section 36 or s.36. But not section, section...
'S36 (1a) (b) of TMA 1970' does not actually exist. If you look at the actual TMA 1970 legislation it is S36 (1A) (b).
The letter continues, '...allows us to conduct a compliance check going back 20 years from the current tax year'. That's interesting as s.36 is about assessment time limits and does not mention compliance checks. S.36 (1A)(b) gives HMRC the power to raise an assessment for Failure to Notify Income Tax or Capital Gains Tax.
It looks as if there is a mix-up with the information powers provided by Schedule 36 FA 2008.
When the letter says, '...going back 20 years from the current tax year', this is where it becomes very odd, because unless the assessment year is the current year no such power is seen anywhere in the tax acts!
What should it say?
If we were writing to the taxpayer we would probably say:
"Schedule 36 1(a) and (b) FA2008 provide HMRC with the powers to obtain information and documents from taxpayer to enable us to check their tax affairs.
S36 (1A)(b) provides HMRC with the power to raise an assessment not more than 20 years after the end of the year of assessment to which it relates.
Now mate, show us your docs! "
Why is HMRC quoting fictional tax legislation?
It's unclear but it is a totally muddle: someone or something has mixed their Schedule 36 FA 2008 Information Powers with their S36 TMA 1970 assessment powers and made 'tax powers soup'. If you have played around with large language model AI you will appreciate that the way it generates answers is by converting text into vectors. This can allow it to generate new content (the so-called 'hallucinations'), the confusion over the section numbers and their meaning does look so like the work of an AI powered Chatbot (see tax cases: ChatGPT fluffs legal arguments).
Could a human get it that wrong? Its possible, if you were confused about the difference between the Taxes Management Act 1970 'TMA 1970' and Finance Act 2008 'FA 2008' that is. That takes the phrase 'ignorance of the law' to to the most basic level.
Useful guides on this topic
Failure to Notify
What is failure to notify chargeability to tax? What happens if you fail to notify HMRC about your taxes? What penalties apply for failing to notify HMRC that you have a tax liability?
Penalties: Failure to Notify
What is failure to notify chargeability to tax? What happens if you fail to notify HMRC about your taxes? What penalties apply for failing to notify HMRC that you have a tax liability?
How to make a tax disclosure
If you need investigation support, assistance in negotiating settlements or a second opinion on penalties, contact the Virtual Tax Partner support team.
Property Letting
HMRC’s Let Property Campaign is a disclosure opportunity aimed at property landlords who have failed to disclose rental income.
How to appeal an HMRC decision
Disagree with an HMRC decision? How do you appeal, what type of decision can you appeal and what are your different options when you disagree with HMRC? What are the key steps in making an appeal?
