Income Tax – It’s That Time of Year Again!

Income Tax

Income Tax FormSpring has arrived but with it come two things that detract from its warmth. First, the pollen count is up and although a life-long sufferer, the effects on the nose, eyes and throat seem diminished as the years have gone by. Second, the more painful and stressful is the annual tax form to be filled in.  This year we have to fill in our income tax declaration online and even the advice notes have to be found on the web.  How will those without a computer cope?  A friend of ours has never used the online system.  Her parents don’t even own one!  What happens to them? (Update 2/5/2013:  Perhaps we heard wrong but a tax form did arrive in the post).

The form has to be completed by the deadline of 27th May or else we will receive an automatic ‘augmentation’ (increase).  This isn’t viewed as a fine by the Tax Office but is in fact that.  We have always been on time but have fallen foul of the authorities on one occasion.

Tax declarations are completed after the fact.  That’s to say that in 2013 we declare our earnings for 2012 and the tax year goes from January to December.  So when we moved back to live in France permanently in January 2007 we filled in our forms in April 2008.  We had the added complication of working in Switzerland.  For us working in the Canton of Vaud we are not taxed at source like those working in the Canton of Geneva.  To cut a long story short we found a tax accountant in the Pages Jaunes (the Yellow Pages) and had our form filled in in pencil.  We dutifully went over everything in pen, signed and sent in the declaration. We paid €100 to the accountant for the privilege.  Not a problem!

So in 2009 for the 2008 declaration and again in 2010 for the 2009 declaration we simply followed the process ourselves.  Again not a problem or so we thought!

As in all countries there are certain things one can deduct from the tax bill.  Private medical insurance is one, insurance policies for pensions is another.  We had to have private medical insurance as we worked in Switzerland.  We had been members of BUPA International since our early days in Singapore so we used this. On moving to France my wife had started a pension policy.  These were declared on our deductions.

In early 2011, we received a request from the tax office for photocopied proof of our deductions.  We complied with the request and shortly after received notification that our medical insurance and pension policy were not acceptable.  We therefore had to pay the missing tax and … 10% augmentation on all items for not paying by the correct time.  Added on to this was a percentage for interest.  We had the right to contest this and could even go to arbitration.

Where had we gone wrong?

Obviously we asked what the problem was.  The medical insurance was unacceptable because it was deemed British – the tax officer stated it had to be either French or Swiss.  The pension policy was not a PERP (Plan d’Epargne Retraite Populaire) and only this type of policy was acceptable.  OOPS! OWCH!

Not a fine!

We asked if we could pay but let off the augmentation and interest during the arbitration process but were denied being told they were an automatic part of the process and not a fine!  We had barely a week to 10 days to pay without further augmentation! Double OWCH!

So we had the misfortune for our dossier to fall on the wrong person’s desk I guess.  Why didn’t they claim back for 2007?  Apparently there is a time limit and they can only deal with 3 years.  We were by then in 2011 so 2007 was 4 years previously.

So in the end we simply had to shrug our shoulders and pay up.  Perhaps that’s where the Gallic shrug of the shoulders originated from?

Not long after I was talking to another colleague who is also in BUPA.  She had just been to an accountant and was about to declare deductions.  I gave her advice not to on the medical insurance and explained our story.  She and her husband didn’t claim!

What is the moral to the story?  I guess be careful and make 100% certain you get it right.  Clearly not even the professionals know everything!  If there are more complex tales that some of you know – please share them with us.

There will be more coming soon on taxes.

Please comment or tell us about your experiences.

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