Heads We Win, Tails You Lose

It would appear that HMRC have a bit of a problem admitting that they have made a mistake despite the fact that all people make mistakes, even government organs!

Changes proposed by the Orwellian named Ministry of Justice will have a negative impact on those seeking to appeal unfair VAT bills. The proposed rule change means that the appellants will no longer be entitled to claim costs of the tribunal, even if successful.

Doesn't this sound a tad unfair?

Is this justice?

Denis Holly, director of VAT at Horwath Clark Whitehill, says that the change will have a particularly negative impact on SMEs.

Given the potential costs involved, and the fact that they may in fact exceed the amount being appealed, the SME may find that it is easier to pay the overstated VAT rather than contest it.

Does this not give an incentive to HMRC to become slipshod in its VAT computations?

Mr Holly is quoted in the Birmingham Post as saying:

"The new rules are a result of the merger between the Inland Revenue and HM Customs, which seeks to establish a common system for direct and indirect taxation tribunals. Costs are not awarded in direct tax tribunals and that principle is mooted to be applied to indirect tax tribunals.

It makes sense to have a common approach; it's unfortunate the rules on costs have been moved in the wrong direction."

Now the real issue, that sits like an elephant in the room, is this; why are the costs of appeals against direct tax assessments not allowed when the case is won by the appellant?

How can anyone seriously believe that this system is fair?

This gives the government and HMRC carte blanche to hound anyone they choose, especially individuals and SMEs, confident in the belief that the costs involved in mounting a defence will invariably outweigh the costs of paying the tax.

This is wrong!

Tax does have to be taxing.

HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"