My £5,000 tax bill is wrong, but you try calling HMRC from Brunei

I have lived overseas for more than a decade and I visit the UK every couple of years. My only UK income is from a flat that I rent out which is managed by a letting agent. As my agent pays tax on my rental income directly to HM Revenue & Customs, I believe that I don’t have to pay the tax myself, although I do file a self-assessment tax return every year.
I had tried to complete my tax return online but by the time HMRC’s access code had been sent to where I live in Brunei, it had expired. I also don’t have the proof of identity required to log in online because the app can’t read my passport chip, so I have been filing paper returns.
In March I had a letter from HMRC demanding that I pay £5,130. Whether this is due to a mistake I made on my tax return, I do not know as it’s not clear from the letter. I tried calling HMRC last summer but the helpline was closed for several months. When it reopened in October I called a few times but an automated message said I would need to wait for 50 minutes to speak to someone, which is prohibitively expensive when calling from Brunei. I also wrote to the tax office twice last year, but haven’t had a reply to either letter. This is really stressful and I hope you can help me.Name and address supplied
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Time and time again I hear from readers struggling to get through to the tax office to query a mysterious penalty.
When I spoke to HMRC it turned out that there was a simple explanation for your surprise tax bill: you had included your earnings from Brunei in your tax return for 2021-22. As you are not a resident in the UK, you don’t have to pay UK tax on your foreign income, so there’s no need to include those earnings in your tax return. But because you had, HMRC thought you owed a lot more tax than you did. When you didn’t pay, it started charging late payment penalties and interest, which led to the £5,031 bill.
You acknowledge that you had made a mistake, but when filling in your tax return you had used the additional information box to explain your circumstances and detailed how much of your income was from Brunei, so I do think HMRC should have considered this. Plus it could all have been resolved with a quick phone call, if you hadn’t had such difficulty getting through.
It takes 35 minutes on average for callers to get through to HMRC, with some on hold for more than an hour. The tax authority said it is making progress in improving its customer service and that it encourages people to use its online services where they can so that its advisers can focus on helping people who need extra support.
HMRC contacted you directly to apologise and has now corrected your record by removing your Brunei earnings so that you no longer owe any late payment penalties or interest, while also dramatically reducing your tax bill. It turned out that HMRC actually owed you £375 because you had paid too much tax through the payments on account process, which is where HMRC estimates how much you need to pay for the following year and gets you to pay half in advance. It has refunded £375 and given you £75 as redress for the distress caused.
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In February my wife and I booked a holiday to India and Bhutan, flying out in October. We booked the trip through the travel agent Mysteries of India which arranged business class flights with Etihad Airways. We planned to take advantage of the Etihad Holidays stopover deal which would give us a free two-night stay at a hotel in Abu Dhabi.
A few days after our travel agent had booked our flights, I used the reference number to book the free stopover using the Etihad website, but it wouldn’t let me. I entered my card details, even though there was no payment to make, but it wouldn’t confirm my booking.
Over the next few weeks I phoned Etihad three times and was told that it would get back to me but I heard nothing. At this point I wanted to make sure that we had accommodation while in Abu Dhabi so I paid £124 for two nights at a hotel through Etihad Holidays.
Then in April our travel agent was told that the free stopover deal had been withdrawn. After some back and forth between our agent and Etihad, in May they were eventually able to secure the free stopover. I then called Etihad again to ask it to cancel the booking I had made and get a refund, but it cancelled our free stopover instead. I asked Etihad to reinstate the free stopover and refund my money, but it won’t carry out my request. I am getting more and more frustrated — there seems to be no way to raise a complaint which means that I can’t escalate my issue to the travel association ABTA.
The amount of money is relatively small but it’s driving me to distraction. Could you help?Peter Halliwell, address supplied
You had the right reference number to book your free stay so it’s strange that the website wouldn’t let you book the hotel. While you waited for Etihad to get back to you, it withdrew its deal. But it wasn’t your fault that the website didn’t work when you tried to book, so I would expect Etihad to honour the offer that was in place when you booked the flights.
Your travel agent had worked hard to convince Etihad to do just that, but then cancelled the wrong booking. I wasn’t able to get an answer about what had gone wrong, but within days of my involvement, it reinstated your free stopover and refunded your £124.
Etihad said: “We are sorry our customer had an issue with their booking on this occasion, and we are pleased they have now been refunded and can enjoy our popular free Abu Dhabi stopover offer.”
I asked why Etihad had no way to raise a complaint and it pointed to its feedback page, although it admitted that this was geared towards people who had a problem after a flight rather than before. It told me that it had since upgraded its website so that people can now complain about a booking before they fly too.
If you have a money problem that you would like Katherine Denham to investigate, email [email protected]. Please include a phone number
£1,422,089: the amount Troubleshooter has saved readers so far this year