Once you have recovered from the shock of an unexpectedly large bill, what next?
First, please consider the possibility the tax office just may be right, so do not forget to be kind and courteous when speaking to them and explaining your problem. Offer your thanks if they speedily correct the error. It is unhelpful to be on poor terms with your local tax office.
We have seen a wide range of mistakes made, however, the main one has certainly been the application of social charges, mostly to UK rental income, but also to pensions where the payer has a valid S1. In both these cases, social charges should not ultimately be applied, but often are.
For UK rental income, the social charge is calculated and added, however, there should be another line offering a tax credit equal to the calculated social charge. For pensions, it should not show at all, so no credit showing.
If you are absolutely confident that a mistake has been made, what should you do?
Whatever action you decide to take, be quick.
1. Send an email to your tax office. This is one of the best and quickest ways to register your concerns. If you are lucky enough to have an efficient tax office, this can work well. Your tax bill will have their email, which will look like: sip.(town name)@dgfip.finances.gouv.fr
2. The website is another option, impots.gouv.fr. Log in to your account selecting: ‘Effectuer une démarche > faire une réclamation > réclamation sur l’impôt sur le revenu’.
3. If you are a competent French speaker, or know one that is happy to help, a visit to the tax office should get the quickest result. If you can get an appointment with an inspector, you will spend far less time waiting. Call or send an email to get an appointment. During very busy periods, just turning up and taking a ticket is the only way.
Often a face to face meeting works well and if you are very lucky you can get a correction, a ‘dégrèvement’ then and there.
What happens if they disagree and state that the figure requested stands?
1. Send a registered letter. You have met the inspector and they disagree, but you need the tax demand to be placed formally in contention to progress. You can do this with the inspector, but verbal requests may ‘get lost’.
A formal letter sent ‘recommandée avec accusé de réception’, must be formally acknowledged and cannot be ignored. Once you have written confirmation the demand is in contention, then you can take it to the next step.
2. The ‘conciliateur fiscal’. This is a department of the same tax office. As long as you know why you should not be paying the tax and lay your argument out clearly, they will review the request and will often rule in your favour, offering the ‘dégrèvement’.
This works for us nearly all the time, with hardly anyone needing to go to the next stage.
3. The ‘Médiateur’ (the médiateur des ministères économiques et financiers). This is not a section of the local tax office, but an office for the region who has the right to overrule the tax office. This can take a long time so the next problem is what to do about the bill, as the payment deadline will often have passed.
This is certainly an area of stress. If the bill is affordable, our advice is often to pay and claim it back. Why pay if it is wrong? Because there is rarely a problem if the bill is in contention with the tax office, but once it gets to the mediator, the instruction to the French treasury is that the bill is due and they will simply take it from your bank account… with penalties! Clearly, penalties will also be reimbursed if the mediator rules in your favour.
If you pay the bill, no nasty surprises, no penalties and planning is easier. Stressful, yes, but much less so.
Three to four months is typical for mediation but it can take longer, even a year or two.
What next if they say no?
4. Legal action. For us it has never come to this. Mediation is slow but thorough. If mediation rejects your claim you must take professional advice but be absolutely sure that you have a claim before taking the step of moving to legal action. Do this immediately, as you have limited time in which to take this action.
What about next year?
Keep a file of all communication, neat, tidy and in order. It will make any future meetings easier. Log exact dates and times of conversations, with as much detail as possible.
If they repeat the same mistake – and this does happen more often than you might think – then it is good to know that you can easily remind them of what happened last year and save everyone the time and trouble.
We have found that online declarations have fewer issues (in fact my experience is zero issues). This is because there is significantly less human involvement.
If you have completed online this year, then well done! The fact that more people will be obliged to complete online, next year, should reduce the problems.
This column was written by Robert Kent of Kentingtons financial advisers.
See www.kentingtons.com
