HMRC Is Shite

HMRC Is Shite
Dedicated to the taxpayers of Britain, and the employees of Her Majesty's Revenue and Customs (HMRC), who have to endure the monumental shambles that is HMRC.

Thursday, 20 January 2011

The Leaky Ship

The FT reports that HMRC is conducting an internal investigation into allegations that HMRC staff/officials have been leaking details of private companies' tax affairs to the media.

Suspicions about internal leaks have been aroused as a result of the ongoing furore about the tax arrangements of certain companies such as Vodafone (some sections of the shouty media and certain dog whistle politicians are of the view that tax avoidance is illegal).

Five staff have been taken off corporate investigation work, and the National Audit Office has been called in to investigate how HMRC reaches tax settlements with major clients.

Unless things have changed very dramatically since I was a lad, settlements are usually reached via a mixture of negotiation and barter. HMRC set down their perceptions of how much tax is owed, the company will rebut these point by point (where it can) and throw into the mix counter claims for overpaid tax etc. In the end a deal is reached.

The procedure usually produces an equitable outcome, so long as the HMRC decisions maker (who signs off on the deal) is not unduly biased one way or another.

It would appear, that in the current febrile atmosphere, there are those within HMRC who believe that Dave Hartnett has become a little too close to certain companies; whilst others counterclaim that he has acted properly, and within the rules/procedures.

Clearly an organisation that is meant to guard people's/companies' tax details, in the same manner that a doctor guards the medical records of his/her patients, cannot function or be trusted if these details are leaked to the press.

Tax does have to be taxing.

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  1. I expect it will turn out to be a mistake by HMRC's courier's. We all know how those labels like to jump from parcel to parcel.

  2. An Internal Investigation?

    Is it not time an external body was set up to look into the business practices of that department.

  3. "some sections of the shouty media and certain dog whistle politicians are of the view that tax avoidance is illegal"

    Utterly irrelevant. Setting aside the irony of the author of a blog with this name calling anyone else in the media "shouty", the court had already ruled in HMRC's favour in the Vodafone case, i.e. had found that the scheme Vodafone had entered into didn't work. The deal was done in lieu of Vodafone's subsequent appeal reaching a higher court.

    If a scheme designed to legally produce a tax result different from that which Parliament intended works, then it's legal. If it doesn't work, it's illegal.

    If a journalist or politician argues that avoidance is "illegal" they are being just as disingenuous as someone who claims that it's "perfectly legal". The point is that that is an entirely fruitless debate. The real question is what the government should do to prevent schemes intended to produce a tax result different from that which Parliament intended from working.

  4. ...also, while I agree that HMRC people definitely should not be leaking specific taxpayers' details (and I'd point out that everything I said above about Vodafone comes from the public domain, which is the only information I have about it), it's interesting to note you taking such a high moral stance on this, given that you actively encourage staff to anonymously post leaks on this site!

    (Though please note I believe there is nothing wrong with the latter and I think it is commendable that you continue to allow anonymous contributions, particularly in the face of critical comments from - an apparently increasing number of - people like me. Other bloggers should take note! For example, while I have more of an affinity with his politics and - even though he apparently isn't going to be as influential as you in the accounting world this year - I'm willing to bet he gets a fair but more traffic, I disagree with Richard Murphy's strict moderation policy.)

    Stew G

  5. Stew

    I don't publish leaks about individual's/companies' tax affairs.

    I should also note that, aside from people writing to me about their own tax issues, I have never received information about anyone else's tax affairs.


  6. Seeing as HMRC has to shed a load of jobs. Why not just sack everyone who had access to the information that was leaked.

    That way there is no need to have a cover up (sorry I mean internal investigation/pass the buck session).

  7. HMRC's internal investigations are a joke - believe me I know. As for Hartnett, when I was a lad, to use Ken's phrase, top Tax Officials did not dine with those whose tax affairs they were responsible for, and certainly not at posh restaurants. You were expected to be whiter than white and not to put yourself in a position which by any interpretation could lead to other conclusions. He should go. That said the last head of the National Audit Office behaved in an even more inappropriate way. We all know what MPs have done, and Lords, so who is there to judge him?
    Finally the list given by the ex swiss banker to Wikileaks is said to contain "Politicians". I was told a long time ago that Politicians and other Senior figures within Government,had been identified through HMRC Tax EVASION amnestys. where are the prosecutions? It all seems to cosy.

  8. Ken,

    I never said you did.


    There's no doubt that it is too cozy, but two points on prosecutions:
    - for both the amnesty and the Swiss list, it would be years before any prosecutions entered the public domain by reaching court, and until that time the public wouldn't hear about it because of the same confidentiality considerations Ken refers to and
    - in the case of the amnesty, it's ... err ... an amnesty. An amnesty from prosecution. Need I go on? ;-)

    Stew G

  9. Stew G

    HMRC retains the right, within the Amnesty, and in accordance with their Prosecution Policy, to prosecute anyone who "holds a position of trust and responsibility". Imagine if, for want of a better example, an ex Chairman of the Board of HMRC (or IR/C&E) came forward and admitted to evading tax and tried to claim the amnesty. I, for one, would expect his feet not to touch the floor and I am sure most people would feel the same.

    I understand your point about the time taken for some cases to reach Court but would have expected one 'high profile' prosecution by now. If only to encourage others to come forward.

    When it comes to tax fraud the old one about "the law" being an anagram of wealth applies big time. Ask Vodaphone.

  10. 1700 20/01,

    OK, I take your point, and I apologise for the condescending tone of my bullet about the amnesty.

    We can only wait and see if anything emerges though, like - i think - you, I won't be holding my breath.

    Stew G

  11. Stew G

    No problem and no apology necessary.

    Story in the Sun yesterday about a "well known pop star" repaying £3million plus interest and penalties - after the amnesty.

    Yes it is a good result but tell someone facing months in prison for fiddling perhaps a few thousands of pounds in child benefit why that person, rich beyond the dreams of avarice, is walking free?

  12. Totally agree. We need some serious action pour encourager les autres.

  13. 21 January 2011 11:18, I have not seen the details of the case in the Sun but anyone fiddling child benefit claims should go to prison.

    I would hazard a guess that the reason the other case did not go to court was because no crime had been committed.

  14. @12.02

    Your guess is wrong - amnesty is against Tax Evasion - not avoidance, which is not an offence and therefore would not need an amnesty.

    The pop star like thousands of others has calculatedly evaded tax over several years and deserves the same treatment as any other criminal. Money buys freedom - it is a F'in disgrace.