Thursday, 15 April 2010
Bullying and Not Fit For Purpose
The Times reports that a taxpayer tried to reclaim £3K in overpaid tax for the year to April 2010.
However, HMRC calculated that he was in fact owed £1K.
Fair enough!
However, under the new penalty regulations HMRC can fine people up to 30% of tax owed for careless mistakes and up to 100% for deliberate errors.
Now being a simple sort of person I would suggest that these rules, unless there has been a deliberate attempt to defraud HMRC, are meant to be applied with some form of commonsense (most especially if it is a tax reclaim rather than annual self assessment).
HMRC took the "middle route", and fined the taxpayer 70% of the £2K difference between the sum that he felt he was owed and the sum that HMRC calculated it would repay him; ie there is an implication that he was deliberately trying to defraud HMRC.
The taxpayer was fined £2K, even though he was owed £1K.
Phil Berwick, director of tax investigations at McGrigors, the law firm that became involved in the case after HMRC issued the fine, told The Times:
"Calculating a rebate can be complicated and the taxpayer in question was unrepresented by an adviser, yet HMRC has refused to take any of this into consideration.
We believe he made an honest mistake, so for HMRC to be fining him is outrageous. HMRC has charged this taxpayer with a higher penalty than someone committing a serious fraud under the old penalty regime."
It is clear that the heavy handed treatment of this taxpayer by HMRC (have they proven that he was attempting to deliberately defraud them?) will put people off from claiming rebates, lest they be fined more than the rebate they get for any accidental error.
Matthew Elliott, chief executive of the TaxPayers' Alliance, put it more directly:
"HMRC seems to have given up entirely on serving the public and taken to bullying them instead. We have a hugely complex tax system, and no one should be fined for being unable to understand its every technicality.
A lot of people are already angry at being overtaxed and, if HMRC tries to deter them from claiming rebates in this way, tempers are going to rise further. The tax system and the tax authorities have ceased to be fit for purpose."
The state is using HMRC to subjugate the population, as it becomes ever more desperate in its search for funds.
Sadly I do not see any change of direction likely, whoever wins the coming election. Lazy MPs voted through the legalisation, that HMRC are now so eagerly using against the taxpayer, without any real scrutiny or care as to the consequences. Many of these same lazy MPs will be returned to parliament after the election.
Who will ask the akward questions?
Tax does have to be taxing.
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Ok I've read the story and as far as I can see he completed a Self Assessment return understating his tax due or over stating his tax paid by £2000. It was determined by HMRC compliance staff that this was deliberate, not careless, and he was fined £1400. Those are the facts of the case without any opinion one way or the other. The rest is just one sided opinion without any facts.
ReplyDeleteIf he and the accountants quoted think they have a case why not just appeal instead of going to the press? If they are going to use the press why not give all of the details of the case? Could it be that it was clearly an attempt at tax evasion and no appeal, to any court, had a chance of success? Example - Every year Mr Smith forgets to declare the £100,000 he earns from job 1. In November he is reminded this needs to be included in his next Return that he submits in December. He "forgets" again and claims a refund he knows he is not due. He is then told to amend the Return by the compliance staff dealing with the enquiry into his Returns. He is then fined a penalty based on 35%-70% of the undeclared amount because it was deliberate and he had to be prompted to correct it.
from the article:
Penalties
0-30% fine of tax owed if mistake was careless and disclosure was unprompted
15%-30% careless/prompted
20%-70% deliberate/unprompted
35%-70% deliberate/prompted
30%-100% deliberate and concealed/unprompted 50%-100% deliberate and concealed/prompted"
Will there be fines issued to people where the tax paid is incorrect becuase they where issued with the wrong tax code?
ReplyDeleteIf so what rate would cover: 'Careless/Attempted to be concealed/prompted'
Careless = Untested system
Attempted to be concealed = HMRC stated there was not a problem with the new system.
prompted = It was leaked to the press before HMRC published details of the problem
They went to the press because the penalty was issued by a pisspoor department using pisspoor legislation. They had no faith in crap appeal procedures.
ReplyDeleteRepayment fraud has a completely different profile. And if there had been evidence of fraud it would have been a 100% penalty and/or prosecution.
David Hairnet
I think this just highlights the main problem with this department.
ReplyDeleteYou have a large department that has the power to give out penalties without the case being tested in a court of law and an appeal system that probably takes too long and is too biased to be of any real use to anyone. They have computer systems that have not been tested but have probably been paid for, senior management that do not give a toss about taxpayers or staff. Middle/Lower management that are perceived to be good (by themselves) but clearly do not care about the staff below them (I am sure there are some decent ones but the staff surveys seem to hide them pretty well).
I see from another post on this site that Leslie Strathie claims 2009 was a good year for HMRC. Well I am afraid that probably only relates the fact that she and the other top management have kept their jobs.
Crikey, I do not even work for them but then I am a taxpayer so I suppose I have the right to put my views forward.
Maybe at last tax payers will realise that HMRC (senior management) are just a bunch of self interested bullies. The staff certainly know this and suffer for it. Is it not time to put the horse in front of the cart? Get rid of the crap in the middle and top and give the people that know how to do the job the chance to get on with it. Billions in uncollected tax might then stand a chance of being collected cutting out the need for continual increases in taxation for those of us who are on PAYE (with whatever tax code)
ReplyDeleteOne question that potential MP's do not seem to have been asked is "do you propose to clear out the non cost effective staff of HMRC and work to provide an efficient and effective Revenue Gathering organisation" It would also be nice to know if anyone intends to force HMRC to abide by the legal requirements of Health & Safety and Employment Legislation.
That alone would go a long way to improving the lot of the coal face workers. Being 95th out of 96 is nothing to be proud of Ms Strathie.
15 April 2010 16:31
ReplyDeleteMost taxpayers will not give a toss about what is going on within HMRC because they do not realise how much of the tax they pay is being wasted within departments such as HMRC. They certainly won’t care about how the staff are treated.
I know there are those who keep going on about it in the news but most of them are politicians and how many people listen to them these days.
I think things will carry on as they are now until the unions toughen up and start publicising what is going on. And lets face it that is not going to happen.