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.

Tuesday, 22 March 2011

HMRC's Blunt Instrument



The Chartered Institute of Taxation (CIOT) is none too impressed with HMRC's proposals for making checks of business records before tax returns have been submitted.

Anthony Thomas, CIOT Deputy President, is of the view that this is in fact merely a revenue raising exercise and that:

"HMRC are putting forward a blunt instrument designed to deliver punishment...."

Nothing new there then!

Here is the full text of CIOT's press release:

"A proposal by HM Revenue and Customs (HMRC) to start making large-scale checks of business records before relevant tax returns are submitted is misguided and will not achieve its objective, argues the Chartered Institute of Taxation (CIOT).

HMRC are proposing to use powers in Finance Act 2008 to check business records in up to 50,000 cases annually, beginning in the second half of 2011, and to impose penalties for poor record keeping. The proposals appear in a consultation paper issued in December 2010, to which the CIOT has responded.

Anthony Thomas, CIOT Deputy President, said:

“The CIOT is strongly supportive of efforts to improve record keeping by business. Many tax advisers have struggled to get clients to follow best practice in this area and would welcome HMRC’s assistance in persuading them.

“However we do not believe this project will meet that objective. Its purpose seems to be more about raising money through penalties than about helping businesses improve their systems. HMRC are putting forward a blunt instrument designed to deliver punishment when what is needed is a collaborative process focused on providing education, guidance and support. We think they need to revert to the drawing board on this.

“In addition, while supportive in principle of systems based pre-return checks that provide guidance and education to businesses, we think that the legal basis for levying penalties as a result of such a check prior to submission of a return is questionable unless there is a failure to keep any records at all or there has been a failure to preserve them. A penalty should only be levied once it has been proved that the bookkeeping records have led to an incorrect return. The penalty should be linked to the incorrect return.”

The CIOT has also criticised the consultation process for the proposals. Anthony Thomas said:

“This consultation was poorly timed. Many tax advisers involved with small businesses who would have liked to comment have been tied up with self-assessment returns and the need to start submitting returns in a new language, iXBRL, during the period.

“If HMRC are determined to press ahead with some form of business records checks they should at least address some of the issues we have raised and consider doing further structured workshops for tax agents before commencing any visits.

“The agents of represented taxpayers should receive notices of visits from HMRC inspectors, while the unrepresented need to be given clear guidance on HMRC’s powers and their rights.”


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9 comments:

  1. This is a bit rich coming from an organisation that struggles to keep it's own records in order.

    ReplyDelete
  2. Since when is being disorganised an offence that one can be penalised?

    Who is to say if anyone's records are not kept 'proper'? Are there guidance notes detailing the exact level and process which records should be kept? Is it set in law?

    No, instead, it all depends on the mood of the person inspecting and their 'perception'

    Another stupid suggestion from Her Majesty's Right C****

    ReplyDelete
  3. And the manpower to do this is coming from where?

    ReplyDelete
  4. "And the manpower to do this is coming from where?"

    The big society that will be made up of the thousands of ex HMRC staff who will surely volunteer to support HMRC in their efforts to increase the tax take of the UK.

    ReplyDelete
  5. 11:17

    "Since when is being disorganised an offence that one can be penalised?

    Who is to say if anyone's records are not kept 'proper'? Are there guidance notes detailing the exact level and process which records should be kept? Is it set in law?"

    I can't answer the "since when" bit without doing more research than this thread justifies, but it's at least since 1970. And yes, it is set in law, for example S12B(1)(a) Taxes Management Act 1970 requires that "any person who may be required to ... make a [tax] return ... shall keep all such records as may be requisite for the purposes of enabling him to make and deliver a correct and complete return". There is, as you suggest there should be, guidance that expands upon this. If I remember rightly, tax returns come with some guidance.

    "No, instead, it all depends on the mood of the person inspecting and their 'perception'"

    Are you quoting somebody when you use the word "perception", because i find it hard to see where this is coming from? Any system of law enforcement requires its enforcers to make subjective about what cases take forward. As is the case with the UK tax system, the inherent subjectivity in this is checked and balanced by access to the right of appeal.

    Asbestos suit on standby for the flames that will no doubt ensue...

    Stew G

    ReplyDelete
  6. Stew G - no abestos suit required.

    The point I'm making is more simpler than that. I do vat / tax returns, file them ontime and produce records when requested - no problem. However, if someone looks at my office desk, it looks like a mess. To me, its not a mess - its how I work. Why should I be penalised for not doing it in a certain way because someone from the HMRC perceives it to be disorganised or improper? That is bullshit.

    We are only human and cannot be treated like some software program that will operate in accordance with robotic measures introduced. Real business doesn't work that way.

    Like 10:48 says... it's a bit rich coming from an organisation that struggles to keep it's own records in order.

    ReplyDelete
  7. 1927,

    But where on earth do you get the idea that penalties would be imposed in the circumstances you describe? Read the extract from the legislation I quoted; it doesn't prescribe a "certain way" that records must be organised, just that records have to be sufficient to evidence the return.

    Penalties can be imposed only when records aren't kept, not if they're a bit messy or because they're not in a certain format. I really can't see where the idea comes from that anything else is the case.

    Of course, I could be wrong. The CIOT article includes the following:
    "we think that the legal basis for levying penalties as a result of such a check prior to submission of a return is questionable unless there is a failure to keep any records at all or there has been a failure to preserve them"
    which could be read as implying that HMRC is planning to impose penalties in circumstances other than where there's been a failure to keep records at all or to preserve them. However, I think it far more likely that CIOT is raising this concern preemptively just in case. Unfortunately, the article doesn't include any link to an HMRC press release or similar on this which might shed more light.

    Stew G

    ReplyDelete
  8. Stew G

    My ideas are not merely conjured up and are based on experience. I've had officers turn up unannounced and question my ability to recall, produce and 'know' stuff at the drop of a hat. Despite the regulation stating one thing, it is open to abuse. If HMRC accuse you of something, it is down to you to prove otherwise and takes forever.

    In a number of cases I've seen, a number of accusations are without foundation and only reversed if/when a taxpayer throws the law book at them - usually at the doorstep of the Tribunal hearing etc.

    I have no idea why HMRC do not fly straight, but giving them more power is clearly not a good idea.

    ReplyDelete
  9. Pay or we'll raid your home, taxman tells 95-year-old widow (and they owe HER money)

    http://www.dailymail.co.uk/money/article-1368931/Pay-raid-home-taxman-tells-95-year-old-widow-owe-HER-money.html

    Wankers.

    ReplyDelete