The coalition government has claimed that they want to simplify the tax system.
As ever, when a politician speaks, there is a world of difference between the words of the politician and reality.
George Osborne's recent proposals to stop child benefit for higher rate taxpayers are a case in point. I noted in early October that the claw back mechanism for child benefit payments will increase the complexity of individuals' tax affairs, and add to the burden on the already overstretched HMRC.
This, of course, is not the only complicating factor within Osborne's proposals. In order for the claw back to operate, the taxpayer (and the family unit) will have to be deemed to be "higher rate".
Easy enough for HMRC to deduce if the recipient (the mother) is herself a higher rate taxpayer. However, the proposal by Osborne is that the cut off will apply to the earnings of the wife and her partner together (means tested benefits are calculated on the basis of household income).
Fair enough, in principle.
Except there is one rather large problem. The independent taxation of husbands and wives has been a key principle of taxation since 1990. In order for HMRC to know if the family is higher rate they will now have to ask the husband/wife to disclose if his/her wife/husband is a higher rate taxpayer, and for the husband to disclose if his wife is receiving child benefit.
At the moment the law specifies that an individual's tax matters are an individual's responsibility, yet the government proposes (via HMRC) to fine those who do not honestly/correctly declare their partner's status wrt the new child benefit rules.
The law, as it now stands, makes those proposed fines unenforceable.
Instead of simplifying the tax system, if this is to work, the coalition will now have to pass new legislation to enforce fines on taxpayers for failing to disclose information about other taxpayers; ie the coalition will increase the complexity of the tax system.
It's a "bugger's muddle", make no mistake about that!
Tax does have to be taxing.
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"The law, as it now stands, makes those proposed fines unenforceable."
ReplyDeleteI think you will find HMRC use a different legal system to the rest of us.
A simplified tax system?
ReplyDeleteSimple and Tax are two words you wont find at HMRC.
This has nothing to do with independent taxation rules introduced in 1990.
ReplyDeleteYou will note that all married couples continued to receive a married allowance until 1999 and that between then and 2005 the extra allowance was restricted to a married couple where one partner was born before 6 April 1935 but given to the man only.
You will also note in 2005 when the civil partnership act was introduced it was the case that any new marriages where one partner was born before 6 April 1935, the allowance went to the highest earner regardless of gender.
If all of the above was contrary to previous legislation - do you not think that someone e.g. a r1ghtw1nger would have pointed this out by now?
HMRC do not make the rules/laws, the government does - usually without consulting the treasury/HMRC to find out how much extra paperwork this would produce either for the taxpayer or for the department and its staff. Blame the successive governments since 1979 who only act on the whim of big businesses not individual taxpayer (although those business are still sure to whine whatever happens)
2 November 2010 20:17, what are you on about "Paperwork" for. I thought you guys where all computerised now.
ReplyDeleteRe. 2 November 2010 23:49
ReplyDeletePre-Merger-
Customs and excise were almost totally computerised with an electronic departmental system.
The Inland revenue was like Life On Mars. Realms and realms of paper that went nowhere.
2 November 2010 23:49
ReplyDeleteIt's amazing how people choose to ignore the fact that someone may be using a figure of speech.
No doubt you would be the first to complain that some decision by the government has caused you extra 'paperwork' or 'beauracracy' and blame it on a whitehall department because it is so much easier to do that. Even if the reams of paper themselves are existential.
I posted @ 2 November 2010 23:49.
ReplyDeleteYour post is quite funny actually as one of the few times I actually had cause to use my printer this year was to print a letter of complaint about the service I received from HMRC when trying to sort out a problem with the online SA system.
The computer systems are crap and don't work. Using pen and paper is quicker and more likely to produce the right answer.
ReplyDeleteAnon @ 3 November 2010 22:14
ReplyDeleteAnd one of the few times I've had to use my printer is to moan at multinational companies for ******g up my account with them.
And before someone bleats about "Well at least you have a choice between...." yes but when you try and exercise that choice, multinationals screw you for everything by intentionally messing with your account with them and making sure you owe them more money.
And before someone bleats about "Well at least you have a choice between...." yes but when you try and exercise that choice, multinationals screw you for everything by intentionally messing with your account with them and making sure you owe them more money.
ReplyDeleteYou could always read and then maybe not sign crap contracts.
You could always read and then maybe not sign crap contracts.
ReplyDeleteThat would imply that the companies concerned actually kept to their part of the contract, which inevitably they do not because they think no one will try and take them to court.
5 November 2010 09:04.
ReplyDeleteA lot of us would stand our ground and not end up with paying extra.
Maybe this is something the public sector in general should think about before signing contracts that would cost more to cancel than stick with. We would all be much better off at this point.
A lot of us would stand our ground and not end up with paying extra.
ReplyDeleteI guess that explains why there have been a huge increase in Bankruptcies etc. and people being denied credit. Because those people stood their ground?
No because multinational companies exerted their corporate power over individuals.
ReplyDeleteI guess that explains why there have been a huge increase in Bankruptcies etc. and people being denied credit. Because those people stood their ground?
In most cases it was because people spent money they did not have.
In most cases it was because people spent money they did not have.
ReplyDeleteErr, it's more because those people, unlike international companies and banks can't go to the govt and say "Please can I have a bailout or a corporation tax write-off so I can continue to bully consumers without learning any lessons? Otherwise I'll go to another country etc......".
Unless someone is deliberately gaming the system, there are few individuals who chose/choose to go bankrupt.