Monday 13 June 2011

HMRC's Back Door Probes

Bottom InspectorLast December HMRC announced that it would visit companies to inspect records (via a pilot scheme known as the Business Records Check Scheme); those companies that fell short of its "standards", wrt record keeping, would face full-scale investigations and potential fines of up to £3K (once the scheme was fully implemented).

The pilot version of the scheme began in March, with a "promise" by HMRC that penalties would not be levied during the pilot stage.

Can you guess what happened next children?

Yes, that's right, HMRC appears to have broken its "promise".

The Telegraph quotes Mike Down, head of tax risk and investigation management at Baker Tilly, who said that its accountants had observed HMRC officers telling small business owners "there was no pilot" and record-keeping penalties would be pursued if "anything was found to be wrong".

"If HMRC is genuinely looking to improve the standard of record keeping, rather than investigating traders by the back door, then the department must make sure it plays by the rules."

Ah now you see there are "rules" and there are "rules", it all rather depends on whether you are HMRC, or an SME.

The Telegraph were told by HMRC:

""We are not seeking to apply the penalty provision during [the pilot] other than in exceptionally serious cases.

In [most cases] the approach will be to assist in improving the business records, where there is a need.
"

So that's alright then!

Tax does have to be taxing.

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5 comments:

  1. Business Records Check Scheme, Real Time Health Check projects and Pilots etc are thought up at meetings by individuals who dream them up hoping that they will be rewarded someway with advancement. But they want fuck all to do with them once they realise its a load of shit and others, usually lower grades have to clean up the spreadsheet mess.

    You never ever believe a word HMRC say, whether its tax matters, or 10,000 staff reduction numbers by 2015.
    Nobody inside knows what anyone else is doing and more seriously doesnt want to know.
    Its still us and them, Customs and Excise and The Inland Revenue and business is made up as it goes along.

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  2. This has got Customs written all over it. There have been powers to penalise those taxpayers who don't keep proper records ever since the introduction of self-assessment (S12B Taxes Management Act 1970 and see HMRC's own instructions in their Enquiry Manual reference EM4650) The only trouble from their point of view was that dodgy records only came to light when a taxpayer was under investigation and any shortcomings were taken into account when assessing penalties under S95 TMA 1970 for an incorrect return. Nobody could be arsed to go for a penalty under S12B and I have it under good authority that the maximum penalty has NEVER been charged. Now it seems they could have two bites at the cherry; one for the iffy records on inspection and another when the returns come in (because these taxpayers WILL be targeted for investigation.) All part of the rush for tax to make LGD look good perhaps?

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  3. So how many "extra" staff did the £900m buy?
    None - try smoke and mirrors, its what they always do.
    Most of the £900m will go in costs like hotel fees, travel, car hire, probably breaking their own benefit in kind rules somewhere.
    They are having to send people all over the country to address "hotspots" from where they previously took staff out!
    Cut staff, increase costs, a complete farce.
    Take away controls, increase hotspots - it happened in Customs and they got slated for it by the powers that be.
    Grrrgh!

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  4. I remember that they took people away completely from the ports and wondered why smuggling of everything became an even bigger problem, can't understand that?
    Then they sent "flying squads" back into the same locations and measured success by lots of seizures - bit like stabbing fish in a barrel when everyman and his dog was smuggling especially fags and baccy.
    Then they sent another load of "flying pickets" inland to address the problems caused by no-one left at the borders, again lots of expense, lots of seizures.
    It was crazy, they created the problem in the first place, the only ones to benefit were:-
    "flying staff" - extra salary, expenses and some bought 2nd homes even, then the organised criminals especially the bootlegging gangs (supply and demand) then the few managers who got promoted and had extra "perks" and bonuses!
    And who are at the top in a particular area of HMRC, yep the former customs managers.
    Get some accountability in there quick, dig out the previous adverse reports it won't have changed much.

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  5. What some people fail to realise is that by using fines in order to basically have companies run their own tax affairs, it's setting HMRC for a future of very minimal human intervention - i.e. creating room for job cuts. Without the fines, trust me - some companies just wouldn't bother, file late, keep messy records.

    The job cuts are all well and good - public finances etc, but if that's what you voted for, you can't really complain now.

    ReplyDelete