Not quite sure

The country is gripped by election fever but, rather than tell you about that, I'm going to tell you about my fun with the tax people.

In Spain the tax people, Hacienda, prepare a draft return which they send to each tax payer. It's called a borrador. If you agree with the draft you sign it, send it back and either collect the tax rebate or pay the shortfall. Nowadays the process is generally an electronic one but it's still possible to deal with your tax return through your bank, your accountant or by going directly to a local tax office.

Now, since I turned 55, I've been collecting a pension from Teachers' Pension. Whilst I was working I also contributed to an additional voluntary contribution scheme with the Prudential and their scheme now pays me some forty quid a month in pension.

When I started to get these pensions I wrote to the UK tax people and told them my situation and asked what I should do about paying what taxes where. As I remember it that letter said I had to pay tax on the Teachers' Pension in the UK but I had to declare the forty quid from the AVCs in Spain. I also noted a phrase they used which was something like "Should you decided not to apply for exemption from UK tax we may inform the Spanish tax authorities."

So the bulk of my pension income was being taxed as it should be and an inconsequential amount was being taxed in the UK when, maybe, it should be taxed in Spain. We all know that there's an agreement in Europe to avoid double taxation don't we? So I took the line of least resistance (read that as the line where I don't have to speak to anyone in Spanish) and tucked the UK tax letter letter away in my records. 

Five years after that letter, this year in fact, I went to on-line to check my borrador for the 2013 tax year.The message told me that I couldn't confirm the draft because they knew I had a pension. I blanched.

I dug out the letter from the UK tax people. I read my coding notices and P60s for the first time. I cannot fault the UK tax people on their use of English. I once asked them about a letter that I seemed to have received three times. Their answer was crystal. Sorry, it said, we have made a mistake and sent you the same letter three times. Please bin two of the letters and keep the third. It said bin. It was clear. On the other hand I could see at least three interpretations of their letter about my tax in Spain. Bearing in mind that the Spanish tax people often charge the overdue tax and then double that amount as a fine I could read that letter as saying anything from "Well you've been a bit naughty so pay Spanish tax from now on" through to "When we've cleared out all your bank accounts and taken the money from the sale of your car we will still have to embargo your house."

So it was with some trepidation that I went to see the tax people here yesterday. My Spanish was surprisingly passable. My advisor person called for assistance from the supervisor; they weren't too sure about it all but they were absolutely certain that I only had to pay tax on the AVCs. My breathing eased. Because of the strange UK April - April tax year they accepted my calculations of my annual income over the calendar year without even checking the arithmetic, I told them what I reckoned the sterling to euro exchange rate was and the software did the sums. "You owe us 79€ for 2013," they said. I grinned. "In fact," said the woman, "You don't actually earn enough to need to make a tax return"

There are advantages to making a tax return. I often say, as I moan to Spaniards about something Spanish, I pay taxes, I have the right to complain. Perhaps more importantly being fiscally resident can work out well when it comes to selling or bequeathing property. Anyway, I live here so it seems right to pay tax. I said I would pay.

"What about the other years" I asked. "Go and talk to an accountant" they said.

Today, in an accountant's office, the person speaking to me looked dumbfounded. "Do you think Hacienda will come looking for me or am I in the clear?," "Do I need to sort out the past years or will the fact that I didn't really need to make a return protect me?" "If they do take some money will it be of the same order as this year or will there be fines and repayments of tax rebates and suchlike?" Shoulder shrugging was the order of the day. "Come back on Monday morning when the boss is in - he'll know."  So I have to wait a little longer but at least I'm in the clear for this year.

I was lying about the European Elections by the way. Interest is minimal. The televised debate was anodyne to say the least until post debate the fathead from the PP made some idiotic remarks about women.

Postscript: I did go back to the accountant's office on Monday. The boss tinkered with the figures in some bit of software on his computer for a while and told me that there was nothing to worry about. "Go home and forget all about it," he said. Now that is the sort of advice I like. And he didn't charge me.


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